MillerMusmar CPAs help you scrutinize your eligibility for Streamlined Domestic Offshore Procedures (SDOP) rewards. That is because once the SDOP is elected and the taxpayer claims the violations were non-willful*, there are possible risk factors that need to be considered and analyzed, such as the evidence of willfulness, including intent of laws, knowledge, and violations.

To participate in the Streamlined Domestic Offshore Procedures, individual U.S. taxpayers, or estates of individual U.S. taxpayers must meet general eligibility criteria for the streamlined procedures in addition to certain requirements specific to domestic applicants. These additional requirements are as follows:

  • The individual taxpayer must fail to meet the non-residency requirements described in the instructions for the Streamlined Foreign Offshore Procedures;
  • The individual taxpayer must have previously filed a U.S. tax return for each the most recent 3 years for which the U.S. tax return due date has passed;
  • The individual taxpayer applying for streamlined domestic procedures must have failed to report gross income from a foreign financial asset or account and pay the U.S. tax required for that asset or account;
  • The individual taxpayer may have failed to file FBAR forms or other informational reporting obligations for foreign financial assets or accounts; and
  • The omissions must result from non-willful conduct, where “[n]on-willful conduct is conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law.”

Although filing an SDOP does not automatically select the taxpayer for an IRS audit, the taxpayers are still subject to the possibility of a normal audit. The taxpayer needs to be prepared to defend filing a SDOP and be able to demonstrate their non-willfulness and show there was no fraud.