Streamlined Domestic Offshore Procedures (SDOP)

What Are Streamlined Domestic Offshore Procedures (SDOP)?

Streamlined domestic offshore procedures (SDOP) are simply an IRS program that enables eligible US taxpayers to fix past offshore tax compliance problems — through one organized filing with a lowered penalty payment. In simple terms, it presents a structured way to correct unreported foreign income & missing forms when the mistakes were not intentional.

SDOP is part of the broader streamlined filing compliance procedures — which exist for people who want to come forward and correct old returns & rebuild trust with the IRS.

Who can use SDOP to fix offshore tax compliance?

It can be used if you live in the United States & filed tax returns and the relevant offshore reporting errors were non-willful. That means the missing disclosures or underreported income came from oversight or confusion or poor advice — rather than an effort to conceal assets. In order to fulfill qualifications, the taxpayers should:

• Meet the IRS definition of US residency
• Have filed original federal income tax returns — for the years in question
• Have foreign income or assets — that were not properly reported
• Be ready to sign a detailed non-willful certification
• Not be under an IRS civil examination — or criminal investigation

What do you have to file under streamlined domestic offshore procedures?

Under streamlined domestic offshore procedures, taxpayers submit a single package that corrects prior offshore accounts tax reporting and income. The IRS expects one complete submission — covering all years inside the program window. The filing process can be outlined as below:

• Amended tax returns for the last three years — where foreign income was not fully reported
• Required international information forms — like Forms 8938, 3520 and 5471 or 8621 — attached to those amended returns, when they apply
• FBARs for the last six years — to disclose foreign bank and financial accounts — that exceeded the filing threshold
• Payment of tax and interest as well as a program penalty — equal to 5% of the highest aggregate value of the foreign financial assets during the covered period

How does SDOP compare to other offshore accounts tax reporting options?

It is generally less costly & less risky than quiet disclosures — or the IRS voluntary disclosure practice for taxpayers whose conduct was not willful

Why work with Clarity Tax Group in Washington on SDOP?

Clarity Tax Group provides assistance to taxpayers in Washington and across the country in preparing streamlined domestic offshore procedure submissions that are precise & complete and well supported. Our experts look at your facts and relevant risk level along with your distinct goals before recommending a path.

Clarity Tax Group leads you through SDOP in practical actions — so you always recognize what action comes next. Our workflow is presented below:

• Eligibility review — your advisor examines the foreign accounts and prior returns along with any IRS letters in order to confirm that streamlined domestic offshore procedures fit — and that your conduct was non-willful
• Data gathering — together you collect account statements and ownership records as well as income details for each relevant year
• Return preparation and penalty calculation — our professionals prepare amended returns & information forms and FBARs along with SDOP penalty figures — that satisfy IRS rules for streamlined filing compliance procedures
• Submission and follow-through — Clarity Tax Group assembles the package for filing and monitors for IRS responses — explaining any necessary actions.

If you think streamlined domestic offshore procedures might aid you in resolving offshore accounts tax reporting gaps — you can speak with Clarity Tax Group to review your distinct situation and customize a plan. Our professional team stands ready to provide 360-degree assistance for full compliance.

FAQs

Is SDOP only for people with large offshore balances?

No. It can apply even to smaller foreign accounts — if there was unreported income or missing forms and the conduct was "non-willful".

Can streamlined domestic offshore procedures fix missed FBAR filings?

Yes. A submission normally includes six years of FBARs — along with amended tax returns & related international forms.

What foreign assets are usually included in an SDOP submission?

Common items are — foreign bank and brokerage accounts & specific pensions and insurance policies with cash value along with ownership in foreign entities.

Can I use SDOP if I currently live outside the United States?

Generally no. It is for US residents. Nonresidents, in general, look at the separate streamlined foreign offshore procedures instead.

What if I am worried my situation might be viewed as willful?

If there is any chance of willful conduct — you should get custom-tailored advice before choosing streamlined domestic offshore procedures — as a different IRS path may be safer.

How can Clarity Tax Group help before I decide to file under SDOP?

Clarity Tax Group can review your facts and test eligibility & outline your options, and then map out the documents needed — before you commit to a filing path.