U.S. taxpayers living abroad are often surprised to learn that they have an obligation to report worldwide income and disclose foreign financial accounts to the IRS — even if they have lived outside the United States for years. If you are a U.S. citizen or lawful permanent resident residing overseas who non-willfully failed to report foreign accounts, investments, or income, the IRS Streamlined Foreign Offshore Procedures (SFOP) may provide a path to full compliance with no penalties. SFOP is one of two programs available under the IRS Streamlined Filing Compliance Procedures and is specifically designed for taxpayers who meet the non-residency requirement — meaning that in at least one of the most recent three tax years, the taxpayer did not have a U.S. abode and was physically outside the United States for at least 330 full days. Unlike its domestic counterpart, SFOP carries a 0% penalty, making it one of the most favorable compliance options available to qualifying taxpayers.
The SFOP process requires taxpayers to file delinquent or amended tax returns for the most recent three years, submit delinquent FBARs (FinCEN Form 114) for the most recent six years, pay any tax and interest due, and complete Form 14653 (Certification by U.S. Person Residing Outside of the United States). The non-willful certification is the most critical component of the submission. The IRS has revised Form 14653 multiple times in recent years and now requires taxpayers to provide an exhaustive narrative — including personal background, financial background, the source of funds in foreign accounts, contacts with those accounts, and both favorable and unfavorable facts. A poorly prepared or incomplete certification can result in rejection from the program and potential referral to a full IRS examination or criminal investigation. Striking the right balance between sufficient disclosure and avoiding unnecessary complications requires experienced legal counsel.
Patel Law Offices is one of the most experienced firms in the country when it comes to offshore voluntary disclosure matters. Led by Mr. Patel — a Board Certified Tax Law Attorney and graduate of Georgetown (J.D.) and New York University (LL.M. in Tax) — our legal team has advised and prepared hundreds of Streamlined cases with the IRS and has counseled over 1,000 clients in voluntary disclosure matters. Our firm has also cleaned up rejected or inadequate SFOP certifications originally prepared without proper legal guidance. We represent clients nationwide and globally from offices in New Jersey, New York, and Florida. If you reside outside the United States and have undisclosed foreign accounts or unreported foreign income, contact Patel Law Offices to schedule a strategy session and learn how SFOP may help you come into compliance.