Tax Issues

Streamlined Foreign Offshore Procedures (SFOP)

United States citizens who own offshore accounts and make income from foreign sources may not realize that this revenue must be reported on their tax returns. But if they haven’t been disclosing this income at tax time, they may be facing steep penalties. If they continue to hide this information from the IRS, things will only get worse.

Many people are reluctant to report their foreign assets to the IRS because they are unsure of the consequences. But recently, the IRS has introduced a new Streamlined Foreign Offshore Procedures that may provide tax amnesty to taxpayers who have not reported their income in the past.

This article will provide updated information on how Streamlined Foreign Offshore Procedures work.

How Does Someone Qualify for Streamlined Foreign Offshore Procedures?

To be eligible for Streamlined Offshore Procedures, three requirements must apply as follows:

·     The failure to report foreign assets in the past must have been non-willful

·     The U.S. resident must have paid taxes in a timely manner for the past three years

·     The taxpayer must not be under audit

The program aims to bring non-willful taxpayers into offshore compliance. In return for coming forward, the IRS will agree to reduce penalties to a single Title 26 Offshore Penalty of 5%.

Recently, the IRS has been conducting more FBAR and international audits in an attempt to collect the money they are owed. If the organization audits you before you enroll in the Offshore Voluntary Disclosure program, you will no longer be eligible.


Here are some FAQs that refer to Foreign Offshore Procedures.

Willful or Non-Willful?

Before applying for Foreign Offshore Procedures, you must determine if you were willful or non-willful in withholding your tax information. Generally, if you were not aware there was a foreign account or asset, you will be considered non-willful.

Are You Under Audit or Examination? 

If the IRS finds out about your foreign assets and opens an audit or examination, it will be too late to apply for Foreign Offshore procedures. A taxpayer under criminal investigation will also be ineligible.

Have You Filed Timely Returns in the Past?

To qualify, you must have had a good tax history who has filed timely returns in the past. You will not be able to file original tax returns as part of Offshore Streamline Domestic Offshore procedures.

Are You an Expat?

An expat, or foreign resident, may qualify for Streamlined Foreign Offshore Procedures if they meet the other requirements involved.

Will I Need an Attorney to Represent Me in My Streamlined Foreign Offshore Procedures Application?

Streamlined Foreign Offshore Procedures make persecution less likely. But they don’t guarantee persecution will not occur.  

An attorney will advise you as far as what information you should be providing and how to represent it. They will make sure you stay on the right side of the law.

If you are looking for a representative to assist you in your legal tax issues, Frost Law is recommended. We have years of experience assisting clients with a wide range of legal issues including tax controversy. Call us to make sure your tax problems become a thing of the past.

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