Easy Steps to Filing US Expat Taxes Under the Streamlined Foreign Offshore Procedures

Two US expat travelers photographing hot air balloons

How to File for the Streamlined Foreign Offshore Procedures

The US is one of only two countries that taxes its citizens on their worldwide income, regardless of where they reside. This fact comes as a shock to many, including many of the estimated 9 million Americans living abroad. The IRS estimates that only half of all US expats are filing the required US tax returns each year—that leaves a lot of Americans delinquent! Thankfully the IRS created a program to get caught up that is ideal for expats who were simply unaware of their filing requirements. Let’s take a look at the Streamlined Foreign Offshore Procedures and how you file under this program if you are behind on your US expat taxes.

What Are the Streamlined Filing Procedures?

The Streamlined Filing Procedures were originally created in 2012 to help US taxpayers get caught up on delinquent US expat taxes. Unfortunately, there were a handful of restrictions that excluded many expats from eligibility. In a surprise move in 2014, the IRS lifted those restrictions, allowing more individuals whose filings were non-willful, to take advantage of the program. Here’s specifically what changed:

  1. Extension of eligibility to US taxpayers residing in the United States. Previously, expats who had returned to the US (or any US resident) was ineligible.
  2. Eliminating a requirement that the taxpayer have $1,500 or less of unpaid tax per year.
  3. Elimination of the risk assessment process – Under the original program you had to be deemed low-risk by the IRS to qualify.
  4. Requiring the taxpayer to certify that previous failures to comply were due to non-willful conduct.
  5. Waiving of all late filing and FBAR penalties for US taxpayers living abroad.

The last change is the most significant. Previously, many expats were hesitant to come forward out of fear of the financial ramifications. With this change, worries about excessive penalties disappeared!

In order to file under this program, it must be clear that your lack of filing was non-willful—meaning, you honestly had no idea you were supposed to file (and many expats are legitimately in this position). You need to sign a statement certifying your innocence. While it may seem like a no-brainer to sign that document, it’s important that you are being truthful.

With the advent of FATCA, Foreign Account Tax Compliance Act, the IRS is receiving information on your foreign account activity from your bank. If there are any shady dealings, it will more than likely come to the surface through FATCA. If you think you may not qualify due to this restriction, you should consult a tax attorney because the other IRS amnesty program, the Offshore Voluntary Disclosure Program (OVDP), ended September 28, 2018.

If you want to take advantage of the foreign Streamlined Filing Procedures, we encourage you to act quickly. The IRS is lenient toward those who come forward voluntarily, but if they notice your non-compliance before you have taken action, they are much less sympathetic. The IRS closure of the Offshore Voluntary Disclosure Program could signal an era of IRS leniency is coming to an end and the Streamlined Filing Procedures may close at any time.

6 Steps to Filing the Streamlined Foreign Offshore Procedures

So, you’ve determined that you qualify for the Streamlined Foreign Offshore Procedures. What’s next? Below is an outline of each step you need to take in order to file under this program.

  1. If you failed to file or even submitted inaccurate returns, you must file the last three (3) years of US tax returns. (If you filed incorrectly, you would submit amended returns for those years).
  2. At the top of each page, you must write the words “Streamlined Foreign Offshore” in RED ink to indicate that you are, indeed, filing under this program.
  3. Complete and sign a statement on the Certification by U.S. Person Residing Outside of the U.S. certifying that you are eligible for the program, that all FBARs have been filed (see more on this below), and that your failure to file all required returns was non-willful. You must submit the original signed statement to your first return, then attach copies of the statement to each additional tax return (and/or information return) being submitted through these procedures.  You should not attach copies of the statement to FBARs. Failure to submit this statement, or submission of an incomplete or otherwise deficient statement, will result in your returns being processed normally and will eliminate your ability to gain the benefits of the program.
  4. Submit payment of any taxes/interest due. Your tax ID number must be included on your check.
  5. If you don’t have a Social Security number, you must submit an application for an ITIN along with your returns.
  6. Gather all documents as outlined above, together with any payments you are making, and send in paper form (NOT electronic) to the IRS at the following address:

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

NOTE: This is only the address for Streamlined filings. All future returns will be filed under the normal filing procedures (most often e-filing).

Last but not least…

What would a discussion about delinquent US expat taxes be if we didn’t discuss FBAR, Foreign Bank Account Report? Most expats that are behind on their tax returns are also behind on FBAR. FBAR must be filed each year if your foreign account balance(s) reaches $10,000 or more at any point (even for one minute!). If you didn’t know you had to file US tax returns, you probably didn’t know that you needed to file this! FBAR has been required for years, and the IRS is taking a firm stance and actively pursuing delinquent FBAR filers.

If you are filing under the Streamlined Foreign Offshore Procedures, you must file the last six (6) years of FBARs. Even if your account balance wasn’t that high in one of the years, you should still file six years of FBARs. This must be done electronically through the FinCEN website.

On the cover page of the electronic form, select ‘Other’ as the reason for filing late. An explanation box will pop up. In the explanation box, enter “Streamlined Filing Compliance Procedures”.

So there it is. These are the streamlined foreign offshore procedures.

Everything you need to know about filing under the Streamlined Foreign Offshore Procedures. Are you considering filing under this program? Learn more about our Streamlined Filing Package, a special offer at a flat-fee to save you money. Comment below or get started today if you have any questions about your personal tax situation and one of our expert CPAs will be happy to answer within one business day!

Originally published in 2014; updated July 2021.