Offshore Voluntary Disclosure Programs (OVDP) and Streamlined Filing Procedures

The Streamlined Filing Compliance Procedures (“Streamlined Procedures”) described below are available to taxpayers who can truthfully certify that their failure to report foreign financial assets and pay all tax due in respect of those assets did not result from willful conduct on their part. The Streamlined Procedures are designed to provide to taxpayers in such situations with a Streamlined Procedure for filing amended or delinquent returns, and terms for resolving their tax and penalty procedure for filing amended or delinquent returns, and terms for resolving their tax and penalty obligations. Joe Viola has been successfully representing taxpayers eligible to participate in the Streamlined programs since the Procedures were first established in 2014.

Prior to that time, and until the program was ended in September of 2018, Joe Viola represented many taxpayers who chose to participate in the IRS Offshore Voluntary Disclosure Program (OVDP), which was much more complicated and involved most recently the penalty assessment of 27.5 percent (50 percent if a bank on the IRS “Bad Bank” list was involved) of the highest unreported annual foreign account balance over an eight year period against both willfully noncompliant and nonwillful taxpayers who owned foreign financial assets. This “one size fits all” approach was truly Draconian given the fact that the majority of taxpayers who failed to report their foreign accounts were genuinely ignorant of the existence of the reporting requirements – which is as true today as it was 12 years ago. Although it was possible to “opt out” of the OVDP at a later stage of the proceedings to seek more lenient treatment, few taxpayers were willing to take that risk. The Streamlined procedures provided a salutary improvement in the Government’s approach to foreign account noncompliance and continue to be a popular program.

The Streamlined Procedures have been developed and implemented entirely by the IRS and approved by the Commissioner of Internal Revenue, and will not be found in published statutes or regulations. Instead, the Internal Revenue Manual (IRM), the official, comprehensive source of instructions, policies, and Procedures for IRS employees, explains at § 4.63.3.1.7.2 (04-21-2025) that the governing documents for the Streamlined Procedures are posted to three sub-sections of the IRS website (IRS.gov):

Streamlined Filing Compliance Procedures
U.S. Taxpayers Residing in the United States
U.S. Taxpayers Residing Outside the United States

The IRS website also contains Frequently Asked Questions and Answers (FAQ’s) regarding both the Streamlined Filing Compliance Procedures for U.S. Taxpayers Residing in the United States and the Streamlined Filing Compliance Procedures for U.S. Taxpayers Residing Outside the United States. The IRS often employs the question-and-answer format in its published Regulations and the Streamlined FAQ’s provide useful guidance for interpreting the general instructions contained on its website. The IRS website Streamlined materials are regularly updated and reflect the official IRS guidance regarding the Streamlined programs at any given time. The information provided below is based on the IRS website as of 04/22/2026.

Eligibility criteria for the Streamlined Procedures
The Streamlined Procedures are designed only for individual taxpayers, including estates of individual taxpayers. The Streamlined Procedures are available to both U.S. individual taxpayers residing outside the United States and U.S. individual taxpayers residing in the United States. Descriptions of the specific eligibility requirements for the Streamlined Procedures for both non-U.S. residents (the "Streamlined foreign offshore Procedures") and U.S. residents ("Streamlined domestic offshore Procedures") are set forth below.

Taxpayers must certify that conduct was not willful. Taxpayers using either the Streamlined Foreign Offshore Procedures or the Streamlined Domestic Offshore Procedures, will be required to certify, in accordance with the specific instructions set forth below, that the failure to report all income, pay all tax and submit all required information returns, including FBARs (FinCEN Form 114, previously Form TD F 90-22,1) was due to non-willful conduct. Non-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.

Disqualifying circumstances

If the IRS has initiated a civil examination of taxpayer's returns for any taxable year, regardless of whether the examination relates to undisclosed foreign financial assets, the taxpayer will not be eligible to use the Streamlined Procedures. In many cases eligibility will be restored once the examination has been concluded and did not relate to undisclosed foreign accounts and related foreign income. Similarly, a taxpayer under criminal investigation by the IRS Criminal Investigation Division is also ineligible to use the Streamlined Procedures.

Taxpayers eligible to use Streamlined Procedures who have previously filed delinquent or amended returns must pay previous penalty assessments. Taxpayers eligible to use the Streamlined Procedures who have previously filed delinquent or amended returns without further acknowledgment in an attempt to address U.S. tax and information reporting obligations with respect to foreign financial assets (so-called "quiet” or “silent” disclosures made outside of an IRS-authorized program) may still use the Streamlined Procedures by following the instructions set forth below. However, any penalty assessments previously made with respect to those filing will not be abated.

Eligibility for the Streamlined Domestic Offshore Procedures
In addition to having to meet the general eligibility criteria, individual U.S. taxpayers, or estates of individual U.S. taxpayers, seeking to use the Streamlined Domestic Offshore Procedures described in this section must: (1) determine that they do not meet the applicable non-residency requirement for participation in the Foreign Streamlined Offshore Procedures, which are more favorable in that they do not involve paying a penalty and allow the filing of delinquent original tax returns; (2) have previously filed a U.S. tax return (if required) for each of the most recent 3 years for which the U.S. tax return due date (or properly applied for extended due date) has passed; (3) have failed to report gross income from a foreign financial asset and pay tax as required by U.S. law, and may have failed to file an FBAR (FinCEN Form 114, previously Form TD F 90-22.1) and/or one or more international information returns (e.g., Forms 3520, 3520-A, 5471, 5472, 8938, 926, and 8621) with respect to the foreign financial asset, and (4) such failures resulted from non-willful conduct. Non-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.

Description of scope and effect of Procedures
U.S. taxpayers (U.S. citizens, lawful permanent residents, and those meeting the substantial presence test of IRC section 7701(b)(3)) eligible to use the Streamlined Domestic offshore Procedures must (1) for each of the most recent 3 years for which the U.S. tax return due date (or properly applied for extended due date) has passed (the “covered tax return period”), file amended tax returns, together with all required information returns (e.g., Forms 3520, 3520-A, 5471, 5472, 8938, 926, and 8621), (2) for each of the most recent 6 years for which the FBAR due date has passed (the “covered FBAR period”), file any delinquent FBARs (FinCEN Form 114, previously Form TD F 90-22.1), and (3) pay a Title 26 miscellaneous offshore penalty. The full amount of the tax, interest, and miscellaneous offshore penalty due in connection with these filings should be remitted with the amended tax returns.

The Title 26 miscellaneous offshore penalty is equal to 5 percent of the highest aggregate balance/value of the taxpayer’s foreign financial assets that are subject to the miscellaneous offshore penalty during the years in the covered tax return period and the covered FBAR period. For this purpose, the highest aggregate balance/value is determined by aggregating the year-end account balances and year-end asset values of all the foreign financial assets subject to the miscellaneous offshore penalty for each of the years in the covered tax return period and the covered FBAR period and selecting the highest aggregate balance/value from among those years.

A foreign financial asset is subject to the 5-percent miscellaneous offshore penalty in a given year in the covered FBAR period if the asset should have been, but was not, reported on an FBAR (FinCEN Form 114) for that year. A foreign financial asset is subject to the 5-percent miscellaneous offshore penalty in a given year in the covered tax return period if the asset should have been, but was not, reported on a Form 8938 for that year. A foreign financial asset is also subject to the 5-percent miscellaneous offshore penalty in a given year in the covered tax return period if the asset was properly reported for that year, but gross income in respect of the asset was not reported in that year.

For information on the meaning of foreign financial asset, see the instructions for FBAR (Foreign Bank Account Report) Form 114, which may be found at Bank Secrecy Act Filing Information (FinCEN.gov) and the Instructions for Form 8938. For example, foreign financial assets may include:

●financial accounts held at foreign financial institutions,
●financial accounts held at a foreign branch of a U.S. financial institution,
●foreign stock or securities not held in a financial account,
●foreign mutual funds,
●foreign hedge funds and foreign private equity funds,
●foreign non-government pension and retirement accounts, and
●foreign insurance policies which have a cash value.

Some foreign financial accounts – in particular those involving pension and retirement plans – may also be considered interests in foreign trusts, which may trigger additional filing requirements that can be effectuated as part of the Streamlined process.

A taxpayer who is eligible to use these Streamlined Domestic Offshore Procedures and who complies with all of the instructions below will be subject only to the Title 26 miscellaneous Offshore penalty and will not be subject to accuracy-related penalties, information return penalties, or FBAR penalties. Even if returns properly filed under these Procedures are subsequently selected for audit under existing audit selection processes, the taxpayer will not be subject to accuracy-related penalties with respect to amounts reported on those returns, or to information return penalties or FBAR penalties, unless the examination results in a determination that the original return was fraudulent and/or that the FBAR violation was willful. Any previously assessed penalties with respect to those years, however, will not be abated. Further, as with any U.S. tax return filed in the normal course, if the IRS determines an additional tax deficiency for a return submitted under these Procedures, the IRS may assert applicable additions to tax and penalties relating to that additional deficiency.

How the Streamlined Domestic Offshore Procedures work.

For each of the most recent 3 years for which the U.S. tax return due date (or properly applied for extended due date) has passed, the taxpayer is required to submit a complete and accurate amended tax return using Form 1040X, Amended U.S. Individual Income Tax Return, together with any required information returns (e.g., Forms 3520, 3520-A, 5471, 5472, 8938, 926, and 8621) even if these information returns would normally not be submitted with the Form 1040 had the taxpayer filed a complete and accurate original return. Taxpayers may not file delinquent income tax returns (including Form 1040, U.S. Individual Income Tax Return) using these Procedures.

The taxpayer must complete and sign a statement on the Certification by U.S. Person Residing in the U.S. (Form 14654) PDF certifying: (1) that he or she is eligible for the Streamlined Domestic Offshore Procedures; (2) that all required FBARs have now been filed (see instruction 9 below); (3) that the failure to report all income, pay all tax, and submit all required information returns, including FBARs, resulted from non-willful conduct; and (4) that the miscellaneous Offshore penalty amount is accurate (see instruction 5 below). This statement is absolutely crucial to the acceptance of the Streamlined submission and it is essential that the statement be not only complete and accurate but also effectively worded to establish the taxpayer’s non-willfulness. The taxpayer must maintain his or her foreign financial asset information supporting the self-certified miscellaneous Offshore penalty computation and be prepared to provide it upon request. The taxpayer must submit an original signed statement and attach copies of the statement to each tax return and information return being submitted through these Procedures. The taxpayer should not attach copies of the statement to FBARs. According to the IRS, failure to submit this statement, or submission of an incomplete or otherwise deficient statement, will result in returns being processed in the normal course without the benefit of the favorable terms of these Procedures.

The taxpayer must submit payment of all tax due as reflected on the tax returns and all applicable statutory interest with respect to each of the late payment amounts. The taxpayer’s taxpayer identification number must be included on his or her check. The taxpayer may receive a balance due notice or a refund if the tax or interest is not calculated correctly.

The taxpayer must also submit payment of the Title 26 miscellaneous Offshore penalty as defined above.

The documents listed above, together with the payments described above, must be sent in paper form (electronic submissions will not be accepted) to:

Internal Revenue Service
3651 South I-H 35Stop 6063 AUSC
Attn: Streamlined Domestic Offshore
Austin, TX 78741

The Streamlined Domestic Offshore Procedures also require the filing of delinquent FBAR reports. For each of the most recent 6 years for which the FBAR due date has passed, the taxpayer must file delinquent FBARs according to the FBAR instructions and include a statement explaining that the FBARs are being filed as part of the Streamlined filing compliance Procedures. The taxpayer is required to file these delinquent FBARs electronically using the FinCEN BSA E-Filing System. On the cover page of the electronic form, select “Other” as the reason for filing late. An explanation box will appear. In the explanation box, enter “Streamlined Filing Compliance Procedures.” The delinquent FBAR’s should be filed prior to the submission of the Streamlined Domestic Offshore Procedures submission – the required Certification includes the representation that the FBAR’s have been filed.

Eligibility for the Streamlined Foreign Offshore Procedures

In addition to having to meet the general eligibility criteria, individual U.S. taxpayers, or estates of individual U.S. taxpayers, seeking to use the Streamlined Foreign Offshore Procedures described in this section must: (1) meet the applicable non-residency requirement described below (for joint return filers, both spouses must meet the applicable non-residency requirement described below) and (2) have failed to report the income from a Foreign financial asset and pay tax as required by U.S. law, and may have failed to file an FBAR (FinCEN Form 114, previously Form TD F 90-22.1) with respect to a Foreign financial account, and such failures resulted from non-willful conduct. Non-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.

For information on the meaning of Foreign financial asset, see the instructions for FBAR (Foreign Bank Account Report) Form 114, which may be found at Bank Secrecy Act Filing Information (FinCEN.gov) and the Instructions for Form 8938.

Non-residency requirement applicable to individuals who are U.S. citizens or lawful permanent residents (i.e., “green card holders”): Individual U.S. citizens or lawful permanent residents, or estates of U.S. citizens or lawful permanent residents, meet the applicable non-residency requirement if, in any one or more of the most recent three years for which the U.S. tax return due date (or properly applied for extended due date) has passed, the individual did not have a U.S. abode and the individual was physically outside the United States for at least 330 full days. Under IRC section 911 and its regulations, which apply for purposes of these Procedures, neither temporary presence of the individual in the United States nor maintenance of a dwelling in the United States by an individual necessarily mean that the individual’s abode is in the United States. The U.S. Tax Court has stated that, while “abode” been “variously defined as one's home, habitation, residence, domicile, or place of dwelling[,] for purposes of federal income taxation a taxpayer's ‘abode’ is generally in the country in which the taxpayer has the strongest economic, family, and personal ties. Domdom v. Comm'r of Internal Revenue, No. 18270-17S, 2022 WL 3755385, at *3 (T.C. Aug. 30, 2022).

How the Streamlined Foreign Offshore Procedures work.

U.S. taxpayers (U.S. citizens, lawful permanent residents, and those meeting the substantial presence test of IRC section 7701(b)(3)) eligible to use the Streamlined Foreign Offshore Procedures must (1) for each of the most recent 3 years for which the U.S. tax return due date (or properly applied for extended due date) has passed, file delinquent or amended tax returns, together with all required information returns (e.g., Forms 3520, 5471, and 8938) and (2) for each of the most recent 6 years for which the FBAR due date has passed, file any delinquent FBARs (FinCEN Form 114, previously Form TD F 90-22.1). The full amount of the tax and interest due in connection with these filings must be remitted with the delinquent or amended returns.

A taxpayer who is eligible to use these Streamlined Foreign Offshore Procedures and who complies with all of the instructions outlined below will not be subject to failure-to-file and failure-to-pay penalties, accuracy-related penalties, information return penalties, or FBAR penalties. Even if returns properly filed under these Procedures are subsequently selected for audit under existing audit selection processes, the taxpayer will not be subject to failure-to-file and failure-to-pay penalties or accuracy-related penalties with respect to amounts reported on those returns, or to information return penalties or FBAR penalties, unless the examination results in a determination that the original tax noncompliance was fraudulent and/or that the FBAR violation was willful. Any previously assessed penalties with respect to those years, however, will not be abated. Further, as with any U.S. tax return filed in the normal course, if the IRS determines an additional tax deficiency for a return submitted under these Procedures, the IRS may assert applicable additions to tax and penalties relating to that additional deficiency.

As stated above, for each of the most recent 3 years for which the U.S. tax return due date (or properly applied for extended due date) has passed:
(1) if a U.S. tax return has not been filed previously, submit a complete and accurate delinquent tax return using Form 1040, U.S. Individual Income Tax Return, together with the required information returns (e.g., Forms 3520, 5471, and 8938) even if these information returns would normally be filed separately from the Form 1040 had the taxpayer filed on time, or
(2) if a U.S. tax return has been filed previously, submit a complete and accurate amended tax return using Form 1040X, Amended U.S. Individual Income Tax Return, together with the required information returns (e.g., Forms 3520, 5471, and 8938) even if these information returns would normally be filed separately from the Form 1040 had the taxpayer filed a complete and accurate original return.

The taxpayer must complete and sign a statement on the Certification by U.S. Person Residing Outside of the U.S. (Form 14653) PDF certifying (1) that the taxpayer is eligible for the Streamlined Foreign Offshore Procedures; (2) that all required FBARs have now been filed (see instruction 8 below); and (3) that the failure to file tax returns, report all income, pay all tax, and submit all required information returns, including FBARs, resulted from non-willful conduct. This statement is absolutely crucial to the acceptance of the Streamlined submission and it is essential that the statement be not only complete and accurate but also effectively worded to establish the taxpayer’s non-willfulness. The taxpayer must submit the original signed statement and must attach copies of the statement to each tax return and information return being submitted through these Procedures. The taxpayer should not attach copies of the statement to FBARs. According to the IRS, failure to submit this statement, or submission of an incomplete or otherwise deficient statement, will result in returns being processed in the normal course without the benefit of the favorable terms of these Procedures.

The taxpayer must submit payment of all tax due as reflected on the tax returns and all applicable statutory interest with respect to each of the late payment amounts. The taxpayer’s taxpayer identification number must be included on his or her check. The taxpayer may receive a balance due notice or a refund if the tax or interest is not calculated correctly.

The documents listed above, together with the payments described above, must be sent in paper form (electronic submissions will not be accepted) to:

Internal Revenue Service
3651 South I-H 35
Stop 6063 AUSC
Attn: Streamlined Foreign Offshore
Austin, TX 78741

In addition to the above requirements, the taxpayer must file delinquent FBAR reports. For each of the most recent 6 years for which the FBAR due date has passed, the taxpayer must file delinquent FBARs according to the FBAR instructions and include a statement explaining that the FBARs are being filed as part of the Streamlined Filing Compliance Procedures. The taxpayer is required to file these delinquent FBARs electronically using the FinCEN BSA E-Filing System. On the cover page of the electronic form, the taxpayer should select “Other” as the reason for filing late. An explanation box will appear. In the explanation box, the taxpayer should enter “Streamlined Filing Compliance Procedures.”

Contact an Experienced Philadelphia Streamlined Procedures Attorney

Philadelphia, Pennsylvania tax attorney Joseph R. Viola has extensive experience representing taxpayers seeking to participate in the OVDP and requiring other advice regarding FBAR, FATCA and other legal issues relating to foreign bank accounts and assets. We welcome you to contact us for an assessment of your situation.