U.S. Tax Voluntary Disclosure Solution Guide

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The Problem Eligibility Solutions Benefit Calculator Action Plan

The Problem Eligibility Solutions Benefit Calculator Action Plan

For Unreported U.S. Taxes, There Is a Safe Solution.

Were you unaware of your foreign financial account reporting obligations as a U.S. citizen or green card holder? The IRS voluntary disclosure programs are the only and safest way to escape massive penalty risks and become compliant.

Find Your Solution

The Stakes

Why You Must Act Now: The Weight of Penalties

IRS penalties for non-compliance are severe, and their magnitude differs astronomically depending on "willfulness." The voluntary disclosure programs are an opportunity to avoid these catastrophic risks.

Non-Willful Violations

For failures due to negligence, mistake, or a good-faith misunderstanding of the law.

• FBAR: Up to $10,000+ per violation
• Form 8938: $10,000 to $60,000 per form
• Other Info Returns: $10,000+ per form

Penalties can stack up to tens of thousands over multiple years and forms.

Willful Violations

For intentionally disregarding or avoiding a known legal duty.

• FBAR: The greater of $100,000 or 50% of the highest account balance, per year.
• Civil Fraud: 75% of the tax underpayment.
• Criminal Charges: Potential prison time and fines.

This can lead to a devastating outcome, wiping out entire account balances in a few years.

Eligibility Check

Which Program is Right for You?

Answer two simple questions to find the most advantageous disclosure program for your situation.

Question 1: Residency Test

In any of the last three tax years, were you physically present outside the United States for at least 330 full days?

Yes

You are likely a non-U.S. resident for this purpose.

No

You are likely a U.S. resident.

Question 2: Assessing "Non-Willfulness"

The IRS considers the total situation to determine if a failure to file was willful. The factors below are key indicators and should be finally assessed with a professional. Which best describes your situation?

• I was unaware of my U.S. citizenship/residency or had no knowledge of any filing obligations for foreign income/assets.
• I relied on a tax professional who provided incorrect advice.
• I may have thought there was a filing requirement, but did not make a conscious effort to avoid confirming it.

If the descriptions above fit your situation and you did not intentionally try to evade tax or conceal assets, you will likely be considered "non-willful".

Recommended Program

Learn more about this program in the "Solutions" section below.

The Solutions

Two Safe Harbors: SFOP vs. SDOP

The IRS offers two main disclosure programs for non-willful taxpayers. Both protect you from potentially hundreds of thousands of dollars in penalties.

Streamlined Foreign Offshore Procedures

$0 Penalty

SFOP is the most favorable program for U.S. taxpayers residing abroad. Upon successful completion, all FBAR and other related penalties are completely waived.

• Submissions:
  Last 3 years of income tax returns (original or amended)
  Last 6 years of FBARs
• Key Document:
  Form 14653 (Certification of Non-Willfulness)
• Payment:
  All unpaid taxes + applicable interest

Streamlined Domestic Offshore Procedures

5% Flat Penalty

SDOP is for U.S. resident taxpayers. It resolves the issue by paying a single 5% offshore penalty in lieu of all other penalties.

• Submissions:
  Last 3 years of 'amended' income tax returns
  Last 6 years of FBARs
• Key Document:
  Form 14654 (Certification of Non-Willfulness)
• Payment:
  Unpaid taxes + interest + 5% penalty

5% Penalty Calculation: Based on the highest year-end aggregate balance of foreign financial assets during the covered period.

Benefit Calculator

Quantifying the Benefit: The Difference Your Choice Makes

Enter your asset value and unpaid tax amount to directly compare the estimated costs of each program against the potential costs if caught by an audit. This shows why disclosure is an 'investment', not an 'expense'.

Enter Simulation Parameters

Highest Aggregate Offshore Asset Value (Year-End)

$500,000

Total Annual Unpaid Tax

$10,000

Next Steps

Your Action Plan for a Successful Filing

The disclosure programs are a valuable opportunity, but accurate and careful preparation is the key to success. Follow these 3 steps to safely become compliant.

1

Gather Records

Collect statements for all foreign financial accounts (bank, brokerage, etc.) for at least the last 6 years, and income records for the last 3 years. Start immediately as this can take time.

2

Assess Your Facts

Write a detailed, factual narrative of why you failed to file. This will be the essential foundation for proving non-willfulness and for consulting with a professional.

3

Consult an Expert

This process is legally complex. The help of an experienced international tax attorney is a crucial investment to avoid mistakes and achieve the best outcome.

Critical Warning: The Danger of a "Quiet Disclosure"
Submitting amended or late returns without going through an official program is extremely risky. The IRS may view this as evidence of willfulness, leading to harsher penalties and prosecution.

© 2025 Interactive U.S. Tax Compliance Guide. All Rights Reserved.

This material is for informational purposes only and does not constitute legal or tax advice.