How is the 5% penalty calculated under the Streamlined Domestic Offshore Procedures?
The Streamlined Domestic Offshore Procedures (SDOP) apply to U.S. residents who failed to report foreign accounts or assets. The 5% SDOP penalty is calculated on the highest year-end aggregate balance of all your unreported foreign financial accounts and assets across the six-year FBAR lookback period. This includes both FBAR-reportable accounts and Form 8938 specified foreign financial assets. The penalty is paid in full with your Streamlined submission.
Key differences:
| Feature | Foreign Offshore | Domestic Offshore |
| Residency required | 330+ days abroad in 1 of 3 years | Not meeting the SFOP test |
| Offshore penalty | None | 5% highest year-end foreign asset balance |
| Certification form | Form 14653 | Form 14654 |
| Tax years | 3 | 3 |
| FBAR years | 6 | 6 |
SFOP residency test detail:
- At least 330 full days abroad in any of the 3 Streamlined tax years, or
- Did not have a U.S. abode in any of those years
SDOP 5% penalty base:
- Computed on the highest year-end aggregate balance of foreign financial assets across the 6 FBAR years
- Includes FBAR accounts plus Form 8938 specified assets
- Paid with the Streamlined submission
Choosing between versions:
- Clear 330+ days: SFOP
- Ambiguous residency: Discuss before choosing; wrong version means rejection
- Green card holders abroad: SFOP if residency test met
For help with version selection, see our Streamlined Filing Compliance Procedures guide.
Last updated on April 29, 2026
