{"id":7011365,"date":"2026-08-03T06:21:11","date_gmt":"2026-08-03T06:21:11","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/legal\/what-taxpayers-should-about-foreign-tax-return-penalties\/"},"modified":"2026-08-03T06:21:11","modified_gmt":"2026-08-03T06:21:11","slug":"what-taxpayers-should-about-foreign-tax-return-penalties","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=7011365","title":{"rendered":"What Taxpayers Should About Foreign Tax Return Penalties"},"content":{"rendered":"\n

Streamlined Filing Compliance Procedures (SFCP, Non-Willful)<\/strong><\/span><\/h2>\n\n\n

The Streamlined Filing Compliance Procedures<\/a><\/span> is one of the most common programs used by Taxpayers who are non-willful and qualify for either the Streamlined Domestic Offshore Procedures or Streamlined Foreign Offshore Procedures.<\/span> <\/span><\/p>\n\n

Streamlined Domestic Offshore Procedures (SDOP, Non-Willful)<\/strong><\/span><\/h2>\n

Taxpayers who are considered U.S. residents and file timely tax returns each year but fail to report foreign income and\/or assets may consider the Streamlined Domestic Offshore Procedures<\/a><\/span>.<\/span><\/p>\n

Streamlined Foreign Offshore Procedures (SFOP, Non-Willful)<\/strong><\/span><\/h2>\n

Taxpayers who are foreign residents may consider the Streamlined Foreign Offshore Procedures<\/a><\/span> which is typically the preferred program of the two streamlined procedures. That is because under this program Taxpayers can file original returns and the 5% title 26 miscellaneous offshore penalty is waived.<\/span><\/p>\n

Delinquent FBAR Submission Procedures (DFSP, Non-Willful\/Reasonable Cause)<\/strong><\/span><\/h2>\n

Taxpayers who only missed the FBAR reporting and do not have any unreported income or other international information reporting forms to file may consider the Delinquent FBAR Submission Procedures<\/a><\/span> \u2014 which may include a penalty waiver.<\/span><\/p>\n

Delinquent International Information Returns Submission Procedures (DIIRSP, Reasonable Cause)<\/strong><\/span><\/h2>\n

Taxpayers who have undisclosed foreign accounts and assets beyond just the FBAR \u2014 but have no unreported income \u2014 may consider the Delinquent International Information Return Submission Procedures<\/a><\/span>. Before November 2020, the IRS was more inclined to issue a penalty waiver, but since then this type of delinquency procedure submission has morphed into a reasonable cause request to waive or abate penalties.<\/span><\/p>\n

IRS Voluntary Disclosure Procedures (VDP, Willful)<\/strong><\/span><\/h2>\n

For Taxpayers who are considered willful, the IRS offers a separate program referred to as the IRS Voluntary Disclosure Program (VDP)<\/a><\/span>. This program is used by Taxpayers to disclose both unreported domestic and offshore assets and income (before 2018, there was a separate program that only dealt with offshore assets (OVDP), but that program merged back into the traditional voluntary disclosure program (VDP).<\/span><\/p>\n

Quiet Disclosure<\/strong><\/span><\/h2>\n

Quiet disclosure<\/a><\/span> is when a Taxpayer submits information to the IRS regarding the undisclosed foreign accounts, assets, and income but they do not<\/strong> go through one of the approved offshore disclosure programs. This is illegal and the IRS has indicated they have every intention of investigating Taxpayers who they discover intentionally sought to file delinquent forms to avoid the penalty instead of submitting to one of the approved methods identified above.<\/span><\/p>\n

Late Filing Penalties May be Reduced or Avoided<\/strong><\/span><\/h2>\n

For Taxpayers who did not timely file their FBAR and\/or other international information-related reporting forms, the IRS has developed many different offshore amnesty programs<\/a><\/span> to assist Taxpayers with safely getting into compliance. These programs may reduce or even eliminate international reporting penalties.<\/span><\/p>\n

Current Year vs. Prior Year Non-Compliance <\/strong><\/span><\/h2>\n

Once a Taxpayer missed the tax and reporting (such as FBAR and FATCA<\/a><\/span>) requirements for prior years, they will want to be careful before submitting their information to the IRS in the current year. That is because they may risk making a\u00a0<\/span>quiet disclosure<\/span><\/a> if they just begin filing forward in the current year and\/or mass filing previous year forms without doing so under one of the approved IRS offshore submission procedures. Before filing prior untimely foreign reporting forms, Taxpayers should consider speaking with a Board-Certified Tax Law Specialist<\/a><\/span> who specializes exclusively in these types of offshore disclosure matters.<\/span><\/p>\n

Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)<\/strong><\/span><\/h2>\n

In recent years, the IRS has increased the level of scrutiny for certain streamlined procedure<\/a><\/span> submissions. When a person is non-willful, they have an excellent chance of making a successful submission to Streamlined Procedures. If they are willful, they would submit to the IRS Voluntary Disclosure Program<\/a><\/span> instead. But, if a willful Taxpayer submits an intentionally false narrative under the Streamlined Procedures (and gets caught), they may become subject to significant fines and penalties<\/a><\/span>.\u00a0<\/span><\/p>\n

Need Help Finding an Experienced <\/em>Offshore Tax Attorney?<\/strong><\/span><\/h2>\n

When it comes to hiring an\u00a0experienced<\/em>\u00a0international<\/a>\u00a0<\/span>tax attorney to represent you for\u00a0unreported foreign and offshore account reporting<\/span>,<\/a> it can become overwhelming for Taxpayers trying to trek through all the false information and nonsense they will find in their online research. There are only a handful of attorneys worldwide who are\u00a0Board-Certified Tax Specialists<\/em>\u00a0and who specialize\u00a0exclusively<\/strong> in offshore disclosure and international tax amnesty reporting.\u00a0<\/span><\/p>\n

*This resource may help Taxpayers seeking to hire offshore tax counsel: How to Hire an Offshore Disclosure Lawyer<\/a><\/span>.<\/em><\/span><\/p>\n

Golding & Golding: About Our International Tax Law Firm<\/strong><\/span><\/h2>\n

Golding & Golding\u00a0specializes exclusively<\/strong>\u00a0in international tax, specifically\u00a0IRS offshore disclosure<\/strong>.\u00a0<\/span><\/p>\n

Contact our firm today<\/a>\u00a0<\/span>for assistance.<\/span><\/p><\/div>\r\n
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