What is SDOP?
SDOP is an IRS route for US residents who missed reporting foreign accounts — but did not intend to break the rules. It sits within the streamlined filing compliance procedures and presents a defined way — to correct past offshore income & account disclosures.
Through this option — taxpayers file corrected forms & pay the tax and interest fee and accept a single offshore penalty payment — instead of many separate fines linked to each missed form or year.
Who can use streamlined domestic offshore procedures?
Streamlined domestic offshore procedures can be used only if the past non-compliance was non-willful — meaning you did not try to hide money & mislead the government. The IRS expects a signed statement in your own words — explaining why foreign income and accounts were not reported. The most common patterns can be outlined as below:
- You did not realize foreign bank interest or dividends had to be on a US return
- You are relocated to the United States and were unfamiliar with offshore accounts tax reporting duties
- A prior preparer never asked about overseas assets or banking relationships
In addition, taxpayers should:
- Satisfy the IRS definition of a US resident for SDOP
- Have original federal returns filed for the years at issue
- Have unreported foreign income — connected to accounts or entities or other non-US assets
What do you file under streamlined filing compliance procedures?
In parallel to the streamlined filing compliance procedures, the general package covers amended returns and information forms along with the foreign account reports. The lookback period is fixed — which keeps the work focused and finite. An SDOP filing set looks like this:
| Item filed | Typical lookback period | Purpose in offshore tax compliance |
|---|---|---|
| Amended federal income tax returns | Last 3 years | Adds previously unreported foreign income |
| Foreign Bank Account Reports | Last 6 years | Lists qualifying non-US financial accounts |
| Non-willful certification statement | Covers all years | Explains why the failure to report was not deliberate |
The offshore penalty is, in general, a percentage of the highest combined balance of all covered foreign assets — during the lookback years and is paid with the package.
How does the SDOP process work step by step?
The streamlined domestic offshore procedures process adheres to a distinct sequence — that keeps every necessary form and explanation aligned.
- Fact-finding meeting — you and the tax professionals gather account records and prior returns along with any notices linked with foreign assets
- Eligibility review — residency status and non-willful facts are checked against SDOP rules
- Penalty and tax estimate — draft calculations show likely tax and interest as well as the offshore penalty — before anything is filed
- Preparation of amended returns and FBARs — the team completes the amended income returns and information schedules with foreign account reports
- Certification and submission — a concise “non-willful narrative” is created & everything is checked for consistency and the package is filed with the IRS and Treasury systems
Why act now instead of waiting on offshore accounts tax reporting?
Taking actions before the IRS discovers the issue through foreign bank data or third-party reports simply strengthens your position. Once the government starts an examination, such a path may no longer be available. A timely use of SDOP can basically lower the exposure to layers of penalty amounts — linked with offshore accounts and income — and resolve years of offshore tax compliance concerns in one organized project.
How do Maris & Associates, CPAs support SDOP cases in Everett and beyond?
Maris & Associates, CPAs works with US residents in Everett — and across the country who need to use streamlined domestic offshore procedures to bring offshore reporting up to date. Our firm reviews foreign statements and life events as well as the intent — then custom-designs a filing plan, completing the risk profile of the case. Our professional process can be presented as below:
- Sorting and summarizing account data — from multiple countries and institutions
- Identifying the years & returns and forms — necessary under streamlined domestic offshore procedures.
- Coordinating offshore accounts tax reporting — with related matters like foreign business holdings or trusts or inherited property
If you believe SDOP may fit your distinct situation, Maris & Associates, CPAs can review your facts. We explain the streamlined filing compliance procedures in plain language and outline a set of action plans in order to close out past offshore tax compliance issues through a single filing. Reach out to our professionals for decades of expertise.
FAQs
Is SDOP the same as the IRS voluntary disclosure program?
No. Streamlined domestic offshore procedures are for non-willful situations. On the other side, the IRS voluntary disclosure program is meant for potential willful conduct — and usually covers higher penalty payments.
What is the penalty rate under SDOP?
The IRS, in general, charges a single miscellaneous offshore penalty payment —- in parallel with a percentage of the highest combined value of the foreign assets in the covered years.
Can I use SDOP if the IRS has already contacted me about my foreign accounts?
In general, you cannot use streamlined domestic offshore procedures once a formal IRS examination has started for the relevant years — so timing is very important.
How long does an SDOP case typically take from start to finish?
Streamlined domestic offshore procedures projects, in general, take several months from gathering records to final submission — varying in line with the information on how many years & accounts and institutions are involved.
What records should I collect before starting SDOP?
You should gather foreign bank and investment statements & prior U.S. tax returns along with any FBAR filings as well as documents showing when each offshore account was opened and closed.
Can it cover foreign businesses or trusts or inherited offshore accounts?
Yes, streamlined filing compliance procedures can apply to offshore tax compliance issues — linked with the entities and inherited accounts — as long as you satisfy “the non-willful standard”
Get a consultation on the solutions to your offshore tax reporting problems by contacting our office about SDOP today.