Tax Q&A in category: Late Filing & IRS Amnesty

Q: What Is IRS Form 9465, and How Do I Set Up an Installment Agreement?

Form 9465, Installment Agreement Request , is the IRS form you use to set up a monthly payment plan when you owe taxes but cannot pay the full balance at once. If your balance is $50,000 or less, you can skip the paper form and apply directly through the IRS Online Payment Agreement tool , which has lower setup fees. The IRS generally responds within 30 days of receiving a Form 9465 request. Monthly payments spread over up to 72 months (or up to 180 months for balances above $50,000 with additional financial disclosure) Online application available for balances of $50,000 or less with reduced setup fees Penalties and interest continue accruing on the unpaid balance while you pay Automatic levy protection once an installment agreement is approved and you stay current Types of installment agreements: TypeBalance thresholdHow to applyGuaranteed$10,000 or lessForm 9465 or online; IRS must approve if you meet criteriaStreamlined$10,001 to $50,000Online or Form 9465; no financial statement requiredNon-streamlinedOver $50,000Form 9465 plus Form 433-F (Collection Information Statement) Setup fees (as of the most recent IRS fee schedule): Online direct debit: $22 (lowest fee) Online non-direct debit: $69 Phone/mail/in-person: $178 (or $43 for direct debit) Low-income waiver: fees reduced or reimbursed if AGI is at or below 250% of federal poverty guidelines For expats, keep in mind that the IRS Online Payment Agreement tool requires a U.S. bank account for direct debit setup. If you bank exclusively overseas, you may need to submit Form 9465 by mail and arrange payments through IRS Direct Pay or international wire. If you owe back taxes after catching up through Streamlined Filing or filing late returns , an installment agreement keeps you compliant while you pay down the balance.

Question 1

What Is a Federal Tax Lien, and How Do You Get It Removed?

Accepted Answer

A federal tax lien is the government’s legal claim against your property when you fail to pay a tax debt after the IRS sends a notice and demand for payment. The lien attaches to all of your assets, including real estate, vehicles, and financial accounts. The IRS explains the full process on its federal tax lien overview page.

How a lien works:

The IRS assesses the tax, sends you a bill (Notice and Demand for Payment), and you do not pay in time
A lien arises automatically by operation of law under IRC Section 6321
The IRS files a public Notice of Federal Tax Lien (NFTL) to alert creditors of the government’s interest
The lien covers all property and rights to property, including assets acquired after the lien arises

Ways to resolve a federal tax lien: OptionWhat it doesWhen to usePay in fullLien released within 30 daysYou can pay the entire balanceInstallment agreementMonthly payments; lien may remainYou need time to payDischargeRemoves lien from specific propertyYou are selling propertySubordinationLets other creditors move ahead of IRSYou need a mortgage or loanWithdrawalRemoves public NFTLYou entered a direct-debit installment agreement or the IRS determines withdrawal is in the best interest

For calendar year 2026, the casual-sale threshold is $2,000, and the mechanic’s lienor threshold is $10,010, before a federal tax lien takes priority.

For expats, a federal tax lien filed in the U.S. affects property you own in the U.S., including bank accounts at U.S. institutions. If you owe back taxes after catching up through Streamlined Filing or filing late returns, resolving the balance quickly helps you avoid a lien filing. You can also challenge a lien through a Collection Due Process hearing.

The Taxpayer Advocate Service lien guide provides additional help if you believe a lien was filed in error or is causing hardship.

Question 2

What Is IRS Form 9465, and How Do I Set Up an Installment Agreement?

Accepted Answer

Form 9465, Installment Agreement Request, is the IRS form you use to set up a monthly payment plan when you owe taxes but cannot pay the full balance at once. If your balance is $50,000 or less, you can skip the paper form and apply directly through the IRS Online Payment Agreement tool, which has lower setup fees. The IRS generally responds within 30 days of receiving a Form 9465 request.

Monthly payments spread over up to 72 months (or up to 180 months for balances above $50,000 with additional financial disclosure)
Online application available for balances of $50,000 or less with reduced setup fees
Penalties and interest continue accruing on the unpaid balance while you pay
Automatic levy protection once an installment agreement is approved and you stay current

Types of installment agreements: TypeBalance thresholdHow to applyGuaranteed$10,000 or lessForm 9465 or online; IRS must approve if you meet criteriaStreamlined$10,001 to $50,000Online or Form 9465; no financial statement requiredNon-streamlinedOver $50,000Form 9465 plus Form 433-F (Collection Information Statement) Setup fees (as of the most recent IRS fee schedule):

Online direct debit: $22 (lowest fee)
Online non-direct debit: $69
Phone/mail/in-person: $178 (or $43 for direct debit)
Low-income waiver: fees reduced or reimbursed if AGI is at or below 250% of federal poverty guidelines

For expats, keep in mind that the IRS Online Payment Agreement tool requires a U.S. bank account for direct debit setup. If you bank exclusively overseas, you may need to submit Form 9465 by mail and arrange payments through IRS Direct Pay or international wire.

If you owe back taxes after catching up through Streamlined Filing or filing late returns, an installment agreement keeps you compliant while you pay down the balance.

Question 3

Can I e-file my U.S. expat tax return if I'm filing late?

Accepted Answer

Yes. The IRS e-file system accepts the current tax year and the two prior tax years, even when filed late. Older delinquent returns and all Streamlined Filing Compliance Procedures submissions must be filed on paper to the IRS service center designated in the procedure instructions.

E-file eligibility windows:

Current tax year: Always eligible
One year back: Eligible via most software through roughly October the following year
Two years back: Limited software support
Three or more years back: Paper filing required

When paper filing is required:

Streamlined Foreign Offshore package: Mail to Austin, Texas address with “Streamlined Foreign Offshore” at top
Amended returns beyond 3 years back: Paper Form 1040-X
Delinquent international information returns: Paper to IRS Ogden

Paper filing tips for expats:

International tracked mail (DHL, FedEx Priority) to prove delivery
Printed transmittal letter referencing all attached forms
All forms stapled in the specified order
Copies kept before mailing

Late e-file mechanics: ScenarioE-file?Late current-year returnYesLate prior-year returnOften yes (software dependent)Streamlined packageNo (paper only)Multiple missing yearsMost require paperAmended return (current year)Yes (Form 1040-X)

For late filing help, see our Filing Taxes Late as an Expat.

Question 4

Does the IRS Forgive Tax Debt After 10 Years?

Accepted Answer

Yes, in most cases. The IRS generally has 10 years from the date it formally assesses your tax liability to collect the debt. This deadline is called the Collection Statute Expiration Date (CSED). Once the CSED passes, the IRS can no longer legally collect the remaining balance, and the debt is removed from your account.

Key facts about the 10-year collection window:

10-year clock starts on the date of assessment, not the date you filed or the tax year itself
Assessment date is typically the date the IRS processes your return or issues a deficiency notice
Each tax year has its own CSED, so multiple years may expire on different dates
Penalties and interest are also subject to the same 10-year limit

The CSED is set by IRC Section 6502. However, certain actions can pause or extend the clock, giving the IRS more time to collect.

Events that extend or suspend the CSED: ActionEffect on the 10-year clockFiling for bankruptcySuspends CSED during case, plus 6 months afterSubmitting an Offer in CompromiseSuspends CSED while OIC is pending, plus 30 daysRequesting an installment agreementSuspends CSED while request is pendingLiving outside the U.S.May suspend CSED if IRS cannot locate youSigning a waiver (Form 900)Extends CSED by the agreed period

For expats, the residency factor is worth noting. If you live abroad and the IRS cannot serve collection notices, the statute may be tolled (paused) until you return or the IRS locates a valid address.

The CSED does not mean you should ignore a tax debt and wait it out. The IRS can file federal tax liens, levy bank accounts, and seize assets at any point during the 10-year window. If you owe a balance you cannot pay in full, an installment agreement or Offer in Compromise may be a better path forward.

Question 5

What Is a Collection Due Process Hearing, and How Do I Request One?

Accepted Answer

A Collection Due Process (CDP) hearing gives you the right to challenge an IRS federal tax lien or proposed levy before an independent Appeals officer. You request it by filing Form 12153 within 30 days of receiving a Notice of Federal Tax Lien filing (Letter 3172) or a final notice of intent to levy (LT11 or CP504). Filing a timely CDP request suspends IRS levy action and preserves your right to petition the U.S. Tax Court if you disagree with the outcome.

30-day deadline from the date on your lien or levy notice to file Form 12153
Levy action paused while your CDP hearing is pending
Tax Court access preserved if you file on time
Equivalent hearing available within one year if you miss the 30-day window (but no levy suspension or Tax Court rights)

What you can raise at a CDP hearing: IssueExampleCollection alternativeInstallment agreement, Offer in Compromise, or currently not collectible statusSpousal defenseInnocent spouse or equitable relief under IRC 6015Underlying liabilityOnly if you had no prior opportunity to dispute the taxAppropriateness of actionWhether the lien or levy is warranted given your circumstances How to file:

Complete Form 12153 with your name, address, SSN, the tax periods at issue, and the reasons for your request.
Mail to the address on your lien or levy notice.
Keep proof of mailing (certified mail recommended) since the 30-day deadline is firm.

Expats should factor in international mail times. If you are overseas and receive a lien or levy notice, consider faxing Form 12153 to the number on your notice to meet the deadline while the mailed copy is in transit.

Question 6

Can I use the Streamlined Filing Compliance Procedures if I already went through the OVDP?

Accepted Answer

No, if you participated in the closed Offshore Voluntary Disclosure Program (OVDP), you are not eligible for Streamlined Filing Compliance Procedures. The Streamlined programs are for non-willful taxpayers who have not already entered OVDP. Your alternate path is the current Voluntary Disclosure Practice.

Why OVDP blocks Streamlined:

OVDP was for potentially willful taxpayers seeking criminal protection
Streamlined is for non-willful taxpayers
A taxpayer who entered OVDP has already declared willfulness risk, making non-willful certification difficult

Alternate paths after OVDP: SituationAlternateOVDP closed out successfullyContinue compliant filing going forwardOVDP opt-out pendingComplete opt-out review, then Streamlined may openNew issues post-OVDPCurrent Voluntary Disclosure Practice for any new willful mattersMinor non-willful slip post-OVDPDelinquent FBAR or International Info Return Submission Current Voluntary Disclosure Practice (post-OVDP):

Form 14457 Part I pre-clearance
6 years of returns (can extend)
75% civil fraud penalty on the highest year
50% FBAR willful penalty on the highest year’s balance
Provides criminal protection when accepted

If OVDP were for one issue only:

New unrelated non-willful issues may still qualify for Streamlined
Same issues or related ones cannot be resubmitted under Streamlined

Consult counsel before any disclosure if OVDP history is involved.

For post-OVDP options, see our Streamlined Filing Compliance Procedures.

Question 7

Can I use the Streamlined Procedures for cryptocurrency income I failed to report?

Accepted Answer

Yes, the Streamlined Filing Compliance Procedures accept amended returns that include previously unreported cryptocurrency income if the original failure was non-willful. You amend the 3-year lookback to include crypto gains, answer the digital asset question correctly, and include delinquent FBARs if foreign exchange accounts pushed you over $10,000.

What to include in a crypto Streamlined package:

Form 1040-X for each lookback year
Schedule D and Form 8949 with all prior crypto sales and trades
Digital asset “yes” on each amended 1040
Schedule 1 or Schedule C for mining, staking, or business income
Delinquent FBAR for foreign centralized exchange accounts (conservative)
Non-willfulness certification on Form 14653

Non-willfulness considerations for crypto:

Industry confusion about reporting rules historically supports non-willful
Reliance on exchange 1099s that did not capture all transactions
Lack of explicit guidance until recent IRS FAQs

Common crypto positions to reconstruct: EventTaxableFormSale for fiatYes8949/Schedule DCrypto-to-crypto tradeYes8949/Schedule DMining incomeYes (ordinary)Schedule 1 or CStaking rewardsYes (ordinary)Schedule 1 or CAirdropsYes (ordinary at FMV)Schedule 1Hard forksYes when accessibleSchedule 1 Documentation:

Exchange transaction history (CSV)
Wallet address records
Cost basis methodology (FIFO by default, specific ID allowed if tracked)

For crypto Streamlined help, see our Cryptocurrency Tax Guide.

Question 8

Do I still have to file a U.S. tax return abroad even if the IRS has never contacted me?

Accepted Answer

Yes. U.S. citizens and green-card holders file based on worldwide income, not on whether the IRS has contacted them. If you are below the filing threshold, you may not owe a return, but having foreign accounts may still trigger FBAR or Form 8938. Streamlined Filing Compliance Procedures are designed for this exact situation.

Why silence is not safety:

Citizen-based taxation: U.S. obligation follows passport and green card
FATCA data exchange: Foreign banks report U.S. accounts to the IRS annually
Treaty/CRS exchange: Broadens the reach further
Statute of limitations: Remains open indefinitely on unfiled returns

Consequences of waiting until contacted:

Loss of Streamlined eligibility
Higher willful-type penalties potentially applicable
Passport revocation for seriously delinquent debt (over $65,000 inflation-adjusted)
Criminal exposure in severe cases

When the IRS typically learns: SourceSignalFATCAForeign bank reports your TIN/SSNCRS/TIEATreaty-based exchangeForm 5471/3520 IRS recordsMissing filings flaggedU.S. broker 1099Cross-checked against 1040Third-party reportsReal estate, inheritance, entity structures Getting current:

Streamlined Foreign Offshore: 3 years of returns, 6 FBARs
Delinquent FBAR Submission: FBAR only, no tax owed
Delinquent International Info Return Submission: 5471/3520 only, no tax owed

For expat catch-up help, see Streamlined Filing Compliance Procedures.

Question 9

Do I have to file all missing state tax returns if I use the Streamlined Filing Procedures?

Accepted Answer

The Streamlined Filing Compliance Procedures cover only federal tax and FBAR obligations. State tax returns are separate. Whether you owe state filings depends on your residency ties to the state during each missing year, and you address those directly with each state’s revenue department.

State filing evaluation:

Severed all residency ties before moving abroad: Often, no state filing is needed after the move year
Retained ties (driver’s license, voter registration, home, family) to a tax-aggressive state (CA, NY, VA, NM, SC): State residency likely continues
Low-risk states (TX, FL, WA, NV, SD, WY, TN, AK): Typically no state filing ever
Each state has its own rules: Review each state separately

Aggressive states to watch: StateWhy it mattersCaliforniaSafe harbor rule; 546+ days abroad + no domicile intentNew YorkDomicile test is tough; 184+ day ruleVirginia“Domicile of choice” strictNew MexicoTough domicile rulesSouth CarolinaContinues residency if any ties remain State catch-up approaches:

Voluntary Disclosure Agreements (VDAs) in most states
Reasonable cause letter with late returns
Residency termination filings to stop the clock

Keep in mind:

State penalties are separate from federal
State audit may follow federal Streamlined filings
State refunds are typically capped at a 3-year lookback

For state filing help, see our State Taxes for Expats guide.

Question 10

Do I need a tax attorney to use the Streamlined Filing Procedures?

Accepted Answer

A tax attorney is not required to use the Streamlined Filing Compliance Procedures. An experienced expat CPA or Enrolled Agent handles most non-willful Streamlined cases. A tax attorney becomes important when willfulness is in question, when facts are ambiguous, or when the Voluntary Disclosure Practice might apply instead.

When a CPA or EA is sufficient:

Clearly non-willful fact pattern
Moderate balance of foreign accounts
Clean certification is straightforward
No criminal risk indicators

When a tax attorney is advisable:

Willfulness is unclear or possible
Very high account balances
Complex structures (CFCs,PFICs, trusts) with compliance gaps
Prior IRS contact or audit history
Multiple years of active concealment

What attorneys add: ValueWhyAttorney-client privilegeDiscussions protected from the IRSWillfulness opinionIndependent counsel analysisVDP navigationIf Streamlined is the wrong pathAudit representationIf the case converts to an audit Typical engagement models:

CPA/EA only: Streamlined prep and filing
Kovel arrangement: Attorney engages CPA for privileged return prep
Joint representation: Attorney and CPA coordinate on complex files

Cost considerations:

CPA/EA engagement typically costs $2,500 to $10,000 for a full Streamlined
Attorney engagement adds $5,000 to $25,000 or more, depending on complexity
Greenback’s flat-fee Streamlined Filing Package ($1,750) covers three years of delinquent federal returns, six years of FBARs, Form 14653 certification, and a dedicated expat tax accountant to maximize your exclusions and credits.

For Streamlined preparation help, see our Streamlined Filing Compliance Procedures guide.

Question 11

What Is Innocent Spouse Relief, and How Do I Request It on Form 8857?

Accepted Answer

Innocent spouse relief allows you to be relieved of responsibility for tax, interest, and penalties on a joint return if your spouse or former spouse improperly reported items or omitted income without your knowledge. You request it by filing Form 8857, Request for Innocent Spouse Relief. The IRS considers three types of relief under IRC 6015, and you do not need to specify which type applies; the IRS will evaluate your case under all three.

Innocent spouse relief (IRC 6015(b)): for understatements of tax due to erroneous items on a joint return, you did not know about
Separation of liability (IRC 6015(c)): allocates the understated tax between you and your spouse if you are divorced, separated, or no longer living together
Equitable relief (IRC 6015(f)): a catch-all when you do not qualify for the first two types, but it would be unfair to hold you liable
No deadline for equitable relief; innocent spouse relief and separation of liability must generally be requested within two years of the first IRS collection activity

Who typically qualifies: FactorSupports reliefWorks against reliefKnowledge of errorYou did not know and had no reason to knowYou participated in or benefited from the understatementMarital statusDivorced, separated, or widowedStill married and filing jointlyEconomic hardshipPaying the tax would cause significant hardshipYou have assets and income sufficient to payAbuse or coercionYour spouse controlled finances or prevented you from reviewing the returnYou had equal access to financial records How to file:

Complete Form 8857 and mail it to the IRS (address on the form instructions).
Do not file it with your tax return; it is a standalone request.
The IRS will contact your spouse or former spouse as part of the review.
Processing takes several months; the IRS may request additional documentation.

Expats who filed joint returns before moving abroad or while married to a non-U.S. citizen spouse may have strong innocent spouse arguments if the foreign spouse handled tax matters without full disclosure.

Question 12

What Happens If You Don't File Your Taxes but Don't Owe Anything?

Accepted Answer

You are still required to file a U.S. tax return even if you expect to owe $0 after applying the Foreign Earned Income Exclusion or Foreign Tax Credit. The IRS only knows you owe nothing if you file a return and claim those benefits. Skipping the filing means the exclusions and credits are never applied, leaving you with a theoretical balance due on the IRS’s books (IRS: Who Must File).

Filing is how you claim $0 – the FEIE and FTC are elective; you must file to use them
The statute of limitations stays open indefinitely for any year you do not file
Failure-to-file penalty can apply even when the underlying tax is $0 after credits
Future refunds at risk – refund claims expire three years from the original due date

About two-thirds of U.S. expats owe nothing after exclusions and credits. But owing nothing and filing nothing are not the same thing in the eyes of the IRS.

What can happen if you skip filing: ConsequenceHow it worksLost exclusion/creditFEIE and FTC must be claimed on a filed return; the IRS does not apply them automaticallyIRS substitute for returnThe IRS may file a return on your behalf using only reported income and no exclusions, creating a balance you do not actually owePenalty assessmentFailure-to-file penalty accrues at 5% per month on any assessed balance, even if a correct return would show $0Open audit windowNo filed return means no statute of limitations; the IRS can audit that year at any time How to fix it if you are behind:

If your failure to file was non-willful, the Streamlined Filing Compliance Procedures let you catch up on three years of returns and six years of FBARs with reduced or waived penalties. Most expats who owe $0 qualify and pay nothing additional beyond the tax preparation cost.

For more on getting current, see our guide on filing late as a U.S. expat.

Question 13

How long does the IRS take to process a Streamlined Filing Compliance Procedures submission?

Accepted Answer

Streamlined Filing Compliance Procedures packages typically process in 6 to 12 months, though complex cases can take longer. The IRS does not issue formal acceptance letters for Streamlined. Silence from the IRS for 1 year after submission is generally a good sign that your package was accepted without audit.

Typical timeline:

Weeks 1-2: IRS receives and logs the package
Months 1-3: Assessment and account updates for each tax year
Months 3-9: Any follow-up correspondence (unusual)
Month 12: Quiet acceptance (no formal letter)

What you will see from the IRS:

CP21 or CP22 notices: Account adjustments reflecting Streamlined tax owed
Notice CP14: Balance due (if you did not pre-pay)
IRS Account Transcript: Shows processing dates and status

What you will not see:

Formal acceptance letter (not issued for Streamlined)
Case closure notice in most instances
Audit letter unless selected for examination

Factors that slow processing: FactorImpactLarge back tax balanceAdditional reviewMultiple international information returnsSpecialized processingIncomplete packageCorrespondence back and forthSensitive disclosure of factsAdditional review Paying the tax:

Pay with submission via EFTPS, Direct Pay, or check
Request an installment agreement if needed
Interest continues on any unpaid balance

For Streamlined preparation help, see our Streamlined Filing Compliance Procedures.

Question 14

How far back do I have to file if I missed U.S. tax returns for ten years?

Accepted Answer

Under the Streamlined Foreign Offshore Procedures, you file the 3 most recent tax years and 6 years of FBARs, regardless of how many more years you missed. The IRS generally does not require pre-Streamlined years to be filed, but you must certify non-willfulness and include all required information in the 3-year window.

Streamlined scope:

3 tax returns: Three most recent years for which the due date has passed
6 FBARs: Six most recent years (often differs from tax year count)
Current year: File normally by the current deadline
Earlier years: Not required unless IRS requests

When earlier years may matter:

Refund claims: Only the 3 prior years are eligible for a refund
Carry-forwards: NOL, capital loss, and FTC carryovers may require earlier years to be reconstructed
Dual-status or expatriation year: Earlier years may be requested by the IRS
IRS specifically requests: Respond to request; do not volunteer unless helpful

Practical approach for 10 missed years:

Gather records for all 10 to support the non-willfulness narrative
File 3 tax years + 6 FBARs per the Procedures
Write a strong certification showing a non-willful origin and discovery timeline
Keep records for all years in case of inquiry

Non-willfulness narrative:

Explain when and how you learned of the requirement
Explain why you did not file earlier (confusion, reliance on advice)
Show cooperation once aware

For multi-year catch-up help, see our guide on Never Filed Taxes.

Question 15

How Do I Write a Reasonable Cause Letter to the IRS for Penalty Relief?

Accepted Answer

A reasonable cause letter is a written request asking the IRS to remove or reduce penalties because circumstances beyond your control prevented you from filing or paying on time. The IRS grants reasonable cause relief when you show you exercised ordinary business care and prudence but were still unable to meet your tax obligations (IRS: Penalty Relief for Reasonable Cause). You can submit the letter on its own or with Form 843, Claim for Refund and Request for Abatement.

Ordinary care and prudence are the standard; you must show you tried to comply
Specific facts and dates matter more than general statements
Supporting documents strengthen your case (medical records, disaster declarations, advisor correspondence)
First-time penalty abatement is a separate, faster path if you have a clean three-year compliance history

What the IRS considers reasonable cause: CircumstanceExampleSerious illness or incapacitationHospitalization during the filing periodNatural disaster or civil disturbanceFederally declared disaster that destroyed recordsDeath of an immediate family memberDeath of spouse or dependent near the filing deadlineInability to obtain recordsEmployer or foreign institution failed to provide documentsErroneous IRS or advisor adviceWritten guidance from a CPA or the IRS that turned out to be wrongFire, casualty, or other disturbanceLoss of records through events outside your control How to structure the letter:

Opening: State the penalty type, tax year, and notice number.
Facts and timeline: Describe exactly what happened and when. Be specific about dates and events.
Ordinary care: Explain the steps you took to try to comply despite the circumstances.
Request: Ask the IRS to abate the specific penalty and cite reasonable cause under IRC 6651(a) or 6662.
Attachments: Include copies of supporting documents (not originals).

Expats often have strong, reasonable cause arguments: reliance on foreign advisors unfamiliar with U.S. filing obligations, difficulty obtaining foreign-source documents, and lack of awareness of U.S. filing requirements while living abroad.

Question 16

Can the IRS Garnish Your Wages for Unpaid Taxes?

Accepted Answer

Yes. The IRS can garnish your wages by issuing a continuous wage levy to your employer. Unlike a bank levy, which is a one-time freeze, a wage levy stays in effect and takes a portion of every paycheck until the debt is fully paid or you make other arrangements. The IRS outlines the process on its wage levy information page.

Key facts about IRS wage garnishment:

Continuous levy: Your employer withholds from each pay period automatically until the IRS releases the levy
Exempt amount: A portion of your income is protected based on your filing status and number of dependents, calculated using IRS Publication 1494
Prior notice required: The IRS must send a Final Notice of Intent to Levy (CP504 or Letter 1058) at least 30 days before garnishing wages
Right to a hearing: You can request a Collection Due Process hearing within 30 days of the final notice

How to stop or release a wage garnishment: ActionHow It HelpsInstallment agreementSets up monthly payments; IRS releases the levyOffer in compromiseSettles the debt for less than the full amountCurrently not collectible statusTemporarily halts collection if you cannot payEconomic hardship claimIRS must release the levy if it causes immediate financial hardshipFull payment or payoffResolves the underlying debt

The IRS explains levy release options on its ‘How to Get a Levy Released’ page. You can also contact the Taxpayer Advocate Service if the levy is creating a hardship and you are unable to resolve it directly with the IRS.

Expats should know that wage garnishment can apply to U.S.-source wages even if you live abroad. If your employer is a U.S. company or has a U.S. payroll presence, the IRS can serve the levy directly. Catching up through the Streamlined Filing Compliance Procedures before the IRS reaches the levy stage is the best way to avoid garnishment altogether.

Question 17

What Is an IRS Bank Levy, and How Do You Get It Released?

Accepted Answer

An IRS bank levy is a legal seizure of funds in your bank account to satisfy an unpaid tax debt. When the IRS issues a levy to your bank, the bank freezes the funds in your account for 21 days before sending them to the IRS. During that 21-day window, you can contact the IRS to resolve the debt or request a release. The IRS explains the full process on its bank levy information page.

What happens during a bank levy:

Your bank freezes the funds in your account up to the amount you owe
You have 21 days before the bank sends the money to the IRS
Joint accounts may be affected if the IRS believes you have an interest in the funds
The levy applies to funds in the account on the day it is received by the bank; future deposits require a new levy

How to get a bank levy released: MethodDetailsPay in fullLevy is released once the balance is satisfiedInstallment agreementSet up monthly payments; the IRS may release the levyEconomic hardshipShow that the levy prevents you from meeting basic living expensesOffer in compromiseSettle for less than the full amount owedCDP hearingChallenge the levy before an independent Appeals officer within 30 days of the noticeIRS errorIf the tax was paid, the assessment period expired, or the IRS did not follow required procedures

The IRS outlines all release conditions on its levy release page. A levy release does not erase the underlying debt; you still need to arrange payment or another resolution.

For expats, the IRS can levy U.S.-based bank accounts even while you live abroad. If you owe back taxes after catching up through Streamlined Filing, setting up a payment plan, or requesting Currently Not Collectible status can prevent a levy from being issued in the first place. The Taxpayer Advocate Service levy guide offers additional help if a levy is causing hardship.

Question 18

What Is Currently Not Collectible Status, and How Do You Qualify?

Accepted Answer

Currently Not Collectible (CNC) status is an IRS designation that temporarily suspends active collection efforts when you cannot afford to pay your tax debt and cover basic living expenses. While in CNC status, the IRS generally will not levy your wages, bank accounts, or other assets. You can request CNC status by contacting the IRS and providing proof of financial hardship.

Key facts about CNC status:

Levies and seizures are paused while the account is in CNC
Penalties and interest continue to accrue on the outstanding balance
The IRS may still file a federal tax lien against your property
Tax refunds may be applied to your outstanding debt

To request CNC status, you typically call the IRS or respond to a collection notice. The IRS will ask you to complete Form 433-F (Collection Information Statement) or a more detailed Form 433-A, documenting your income, expenses, and assets. The IRS compares your financials against its allowable living expense standards to determine whether you qualify.

What CNC status does and does not do: CNC providesCNC does not providePause on levies and wage garnishmentForgiveness of the tax debtTemporary relief from collection callsPause on interest and penaltiesTime to stabilize your financesRemoval of federal tax liensContinued ability to make voluntary paymentsGuarantee against future review

The IRS reviews CNC accounts periodically, typically once per year. If your income increases or your financial situation improves, the IRS may remove CNC status and resume collection. The 10-year collection statute continues to run while your account is in CNC, which means the debt may eventually expire if you remain unable to pay.

If your situation changes and you can afford partial payments, an installment agreement or Offer in Compromise may be a better long-term solution.

Question 19

What happens if the IRS rejects my Streamlined Filing submission?

Accepted Answer

Streamlined Filing Compliance Procedures rejections are rare. When they happen, the IRS usually cites incomplete filings, a disputed non-willfulness certification, or prior IRS contact that disqualifies the submission. Options include completing missing items, responding to the IRS inquiry, or transitioning to the Voluntary Disclosure Practice.

Common rejection causes:

Incomplete package: Missing Form 14653/14654 certification, missing FBAR years, and missing tax returns
Disputed non-willfulness: IRS receives information suggesting willful conduct
Prior IRS contact: The IRS had already contacted you about the issues
Streamlined Domestic-Foreign boundary: Wrong version used

What to do when rejected:

Read the IRS notice carefully: Identify specific reasons
Complete missing items quickly if procedural
Seek counsel if willfulness is disputed
Consider VDP for willful conversions
Respond within stated deadlines

After rejection consequences: FindingNext stepProcedural missing itemComplete and resubmitWillfulness disputeVDP or audit defensePrior contactAudit process continues; no program reliefResidency disputeClarify facts or switch between SFOP/SDOP Continuing case without Streamlined:

Tax returns already filed remain filed; they become standard late filings
FBARs already filed remain with FinCEN
Penalties can be separately assessed without the program protection

For Streamlined review help, see our Streamlined Filing Compliance Procedures.

Question 20

How is the 5% penalty calculated under the Streamlined Domestic Offshore Procedures?

Accepted Answer

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: FeatureForeign OffshoreDomestic OffshoreResidency required330+ days abroad in 1 of 3 yearsNot meeting the SFOP testOffshore penaltyNone5% highest year-end foreign asset balanceCertification formForm 14653Form 14654Tax years33FBAR years66 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.

Question 21

What Is an IRS Notice of Deficiency, and How Long Do You Have to Respond?

Accepted Answer

An IRS notice of deficiency, often called the “90-day letter,” is a formal legal notice proposing additional tax you owe. Once you receive it, you have 90 days to file a petition with the U.S. Tax Court to challenge the amount before the IRS can legally assess and collect the tax. If you live outside the U.S., you get 150 days instead of 90.

Key facts about the notice of deficiency:

90-day deadline to petition Tax Court (150 days if your address is outside the U.S.)
The deadline cannot be extended by the IRS or by requesting additional time
Sent via certified mail to your last known address on file with the IRS
Failing to respond means the IRS assesses the proposed tax automatically

The notice of deficiency typically arrives as Letter 3219 or Notice CP3219N. It details the tax year in question, the proposed changes to your return, and the additional tax the IRS believes you owe.

Your three options after receiving a notice of deficiency: OptionWhat happensAgree with the proposed amountSign and return Form 5564 (waiver); the IRS assesses the taxDisagree and petition the Tax CourtFile a petition within 90/150 days; the case goes before a judgeDisagree, but do not petitionIRS assesses the tax; you pay, and then file a refund claim

The 150-day window matters for expats. If you live abroad and your IRS address still shows a U.S. location, you may only get 90 days. Keep your address current with the IRS by filing Form 8822 so the correct deadline applies.

If the IRS has already sent collection notices before the deficiency letter, you may also have the right to request a Collection Due Process hearing. If your balance is the result of late filing, a tax professional can help you evaluate whether the proposed amount reflects credits and exclusions you may have missed.

Question 22

Can the IRS Collect Unpaid Taxes From You While You Live Abroad?

Accepted Answer

Yes, living outside the United States does not stop IRS collection activity. The IRS can levy U.S.-based bank accounts, garnish wages paid by a U.S. employer, file a federal tax lien against U.S. property, and revoke your passport if your debt reaches the seriously delinquent threshold ($66,000 for 2026). The IRS outlines its international collection tools in IRM 5.21.3.

How the IRS reaches expats:

U.S. bank accounts: An IRS bank levy freezes funds in any U.S. account tied to your SSN, regardless of where you live
U.S.-source wages: A continuous wage levy applies if your employer has a U.S. payroll presence
Federal tax liens: Attach to all U.S. real estate, vehicles, and financial accounts you own
Passport action: Debt over $66,000 (2026) triggers CP508C certification to the State Department

IRS ToolWhat It ReachesExpat ImpactBank levyU.S. bank accountsFunds frozen even if you bank remotely from abroadWage levyU.S.-source paychecksEmployer withholds each pay periodFederal tax lienU.S. property and assetsBlocks sale or refinance of U.S. real estatePassport revocationTravel documentsCan strand you abroad or block re-entryTreaty collectionAssets in 6 treaty countriesCanada, Denmark, France, Japan, Netherlands, Sweden

The IRS can also request collection assistance from six treaty partners through the Mutual Collection Assistance program. If you hold assets in Canada, Denmark, France, Japan, the Netherlands, or Sweden, those countries can use their own domestic collection powers on behalf of the IRS.

The best way to avoid collection action is to come into compliance before the IRS contacts you. The Streamlined Filing Compliance Procedures eliminate penalties for non-willful late filers, and entering an installment agreement or requesting currently not collectible status can pause active collection.

Question 23

Will the IRS audit me if I file through the Streamlined Procedures?

Accepted Answer

Streamlined Filing Compliance Procedures filings are not exempt from IRS audit, but audit rates are low for well-documented non-willful submissions. The main audit drivers are willful tax avoidance, high account balances, complex structures (CFCs, PFICs, trusts), and inconsistencies across filings.

Streamlined audit reality:

No automatic audit: The IRS does not audit every Streamlined package
Random selection: Possible but infrequent for clean filings
Facts-driven review: Higher scrutiny for large balances or complex structures
Non-willfulness certification: Statements under penalty of perjury are taken seriously

Factors that increase audit risk:

Very large foreign balances relative to income
Complex entity structures (CFC, PFIC, foreign trust)
Inconsistencies between FBARs, Form 8938, and tax returns
Suspicious non-willfulness narrative: Facts suggesting you knew but did not act
Prior history of IRS issues

How to reduce audit risk: ActionBenefitComplete, accurate packageFewer follow-up questionsStrong non-willfulness narrativeReduces scrutinyConsistent FBAR/8938/1040 balancesRemoves inconsistency flagsProfessional preparationReduces error rateInclude all relevant formsPreempts follow-up If audited after Streamlined:

Cooperate with audit requests
Provide supporting documents within the timeframe
Consider professional representation (Form 2848)
Audit scope is usually limited to the three Streamlined years unless new issues arise

For audit-related information, see our IRS Tax Audits for Expats guide.

Question 24

What Is the Penalty for Not Filing Taxes as a U.S. Citizen Abroad?

Accepted Answer

U.S. citizens living abroad face the same federal filing penalties as domestic taxpayers, plus additional penalties for unreported foreign accounts and assets. The IRS charges a failure-to-file penalty of 5% of unpaid tax per month (up to 25%) and a failure-to-pay penalty of 0.5% per month (up to 25%). If a return is more than 60 days late, the minimum penalty is $525 or 100% of the tax owed, whichever is less.

Penalties specific to expats and international filers:

FBAR (FinCEN 114): Up to $10,000 per account per year for non-willful failure to report foreign accounts over $10,000 in aggregate. Willful violations can reach $100,000 or 50% of the account balance.
FATCA (Form 8938): $10,000 for failure to file, plus an additional $10,000 for each 30-day period of non-filing after IRS notice, up to $50,000.
International information returns (Form 5471, Form 3520, Form 8865): $10,000 or more per form per year.
Passport revocation: Tax debt over $66,000 (2026 threshold) can trigger State Department certification to deny or revoke your passport.

PenaltyRateCapFailure to file5% of unpaid tax per month25%Failure to pay0.5% of unpaid tax per month25%Combined maximum5% per month (first 5 months)47.5% of tax owedFBAR (non-willful)$10,000 per account per yearNo cap on yearsFATCA (Form 8938)$10,000 initial + $10,000/30 days$60,000Minimum late penalty (60+ days)$525 or 100% of taxWhichever is less

Many expats owe zero U.S. tax after applying the Foreign Earned Income Exclusion or Foreign Tax Credit. If you owe no tax, failure-to-file and failure-to-pay penalties do not apply. However, FBAR and FATCA penalties are assessed independently of whether you owe tax.

The Streamlined Filing Compliance Procedures eliminate all penalties for non-willful late filers living abroad.

Question 25

Can You Go to Jail for Not Filing Taxes?

Accepted Answer

Yes, willful failure to file a tax return is a federal misdemeanor under IRC 7203, punishable by up to one year in prison and a $25,000 fine for each year not filed. However, the IRS pursues criminal prosecution only in a small fraction of cases, and only when it can prove the failure was willful, meaning you knew you had a filing obligation and deliberately chose not to comply. Negligence, confusion, or honest mistakes are not criminal.

Willful failure to file (IRC 7203): misdemeanor, up to 1 year per unfiled year, $25,000 fine
Tax evasion (IRC 7201): felony, up to 5 years and a $100,000 fine, requires an affirmative act of evasion
Filing a fraudulent return (IRC 7206): felony, up to 3 years, and a $100,000 fine
Non-willful failure (most late filers): civil penalties only, no criminal exposure

What “willful” means in practice: BehaviorLikely classificationUnaware of U.S. filing obligation while living abroadNon-willfulKnew about the obligation but procrastinated or was confusedTypically non-willfulDeliberately hid income or used offshore accounts to avoid detectionWillfulFiled false documents or used a nominee to conceal assetsWillful (potential felony)

The IRS Criminal Investigation Division investigates roughly 2,000 cases per year across all tax crimes. The vast majority of unfiled-return cases result in civil penalties (failure-to-file and failure-to-pay), not criminal charges.

How to reduce your risk:

Filing voluntarily before the IRS contacts you is the single strongest step. Programs like the Streamlined Filing Compliance Procedures and the Voluntary Disclosure Practice are designed to bring you into compliance. For an in-depth look at the legal distinctions, see our guide on tax fraud vs. tax evasion.

Question 26

What are the IRS penalties for failing to file Form 3520 or not reporting a foreign gift?

Accepted Answer

Form 3520 penalties are substantial. Late filing carries a 5% per month penalty up to 25% of the gross reportable amount, and unreported foreign gifts over $100,000 from an individual or the inflation-adjusted annual threshold from a foreign entity can trigger a 35% penalty on the unreported amount. The IRS has aggressively assessed these penalties even for trivial cases.

When Form 3520 is required:

Gift over $100,000 from a nonresident alien individual or foreign estate
Gift over the inflation-adjusted annual threshold from a foreign corporation or partnership
Foreign trust distribution received by a U.S. person
Creation or transfer to a foreign trust by a U.S. person

Penalty structure: ViolationPenaltyLate Form 3520 for foreign trust transaction35% of gross reportable amountLate Form 3520 for unreported foreign gift5% per month up to 25%Form 3520-A (trustee return) not filed5% of trust asset valueWillful violationsUp to 75% Common problem areas:

Late filing, even when the gift was fully legal and non-taxable
Inheritance from foreign relatives was missed entirely
Foreign trust distributions misidentified as simple wire transfers
IRS automated penalty assessment without human review

Relief paths:

Reasonable cause statement (narrowly granted)
Delinquent International Information Return Submission Procedure if no tax is due
Streamlined Foreign Offshore if fitting the overall non-willful fact pattern

For Form 3520 and gift tax help, see our Gift Tax Reporting Guide.

Question 27

Can I amend previously filed U.S. tax returns as part of the Streamlined Filing process?

Accepted Answer

Yes, Streamlined Filing Compliance Procedures explicitly allow amending previously filed returns within the 3-year lookback period to disclose previously missed foreign income or reporting requirements. You file Form 1040-X for each amended year and include all three years in the single Streamlined package.

Amended vs delinquent within Streamlined:

Delinquent years (no return filed): Use Form 1040 marked Streamlined
Amended years (return filed, incomplete): Use Form 1040-X marked Streamlined
Mix and match: Some years amended, some years delinquent; all in one package

Form 1040-X in Streamlined:

Write “Streamlined Foreign Offshore” or “Streamlined Domestic Offshore” in red at the top
Include an explanation of changes in Part III
Attach revised Form 2555, Form 1116, Form 8938, etc., as applicable
Attach to the package with Form 14653/14654 certification

Common amendment scenarios: SituationTypical fixMissed foreign wagesAdd Form 2555 or Form 1116 with the amended incomeMissed PFICAdd Form 8621 per fundMissed foreign rentalAdd Schedule EMissed foreign brokerage dividendsAdd Schedule B with countryMissed FBARFile 6 years of delinquent FBAR through BSA E-Filing Package structure:

3 years of amended or delinquent Form 1040/1040-X
6 years of FBARs via BSA E-Filing
Form 14653 (Foreign) or 14654 (Domestic) non-willfulness certification
Any delinquent info returns (5471, 3520, etc.)

For Streamlined amendment help, see our Streamlined Filing Compliance Procedures.

Question 28

Are There Special Steps for Form 3520-A When Using the Streamlined Filing Compliance Procedures?

Accepted Answer

Yes. When Form 3520-A is required for a foreign trust with a U.S. owner, delinquent versions must be included with the Streamlined Filing Compliance Procedures package. If the foreign trustee will not cooperate, the U.S. owner files a substitute Form 3520-A and attaches it to Form 3520 as Exhibit.

Streamlined and foreign trusts:

Streamlined Foreign Offshore accepts Form 3520-A and Form 3520
6-year lookback for FBAR; 3-year lookback for income tax
Include all trust-related years to get a clean slate

Common trust scenarios requiring 3520/3520-A:

Foreign grantor trusts (you funded it and retain powers)
Canadian RESPs (often treated as a trust)
Some Australian SMSFs (contested)
Some UK pension arrangements were structured as a trust
Foreign family trusts with a U.S. beneficiary

Substitute Form 3520-A procedure:

Prepare the 3520-A yourself using the trust records available
Check the “substitute” box at the top
Attach to Form 3520 of the U.S. owner
No penalty waiver for late 3520-A unless the qualifying program is used

Filing mechanics within Streamlined: FormWhere it goesForm 3520 (owner)Attached to delinquent 1040 or filed separatelyForm 3520-A (trustee)Filed separately, mailed to OgdenSubstitute 3520-AWith Form 3520, if the trustee is uncooperativeFBARThrough BSA E-Filing for each year

For trust-related Streamlined help, see our Form 3520 Guide.

Question 29

What Are the IRS Delinquent International Information Return Submission Procedures?

Accepted Answer

The IRS delinquent international information return submission procedures allow you to file late international forms, such as Form 5471, Form 3520, Form 8865, and others, with a reasonable cause statement to request penalty relief. This program is separate from Streamlined Filing and is designed for taxpayers who missed an information return but do not owe additional tax. Full details are on the IRS delinquent international information return page.

Forms covered by this procedure:

Form 5471 (Information Return of U.S. Persons With Respect to Certain Foreign Corporations)
Form 3520 (Annual Return To Report Transactions With Foreign Trusts)
Form 3520-A (Annual Information Return of Foreign Trust With a U.S. Owner)
Form 8865 (Return of U.S. Persons With Respect to Certain Foreign Partnerships)
Form 8938 (Statement of Specified Foreign Financial Assets)
Form 926, Form 8621, and other international information returns

How to file: StepAction#1Prepare the delinquent information return(s)#2Attach a reasonable cause statement explaining why the return was late#3For Forms 3520/3520-A, write “Reasonable Cause Statement attached” at the top of page 1#4For all other forms, attach to an amended return (Form 1040-X) and file per the amended return instructions Penalties that may apply without reasonable cause:

Form 5471: $10,000 per form, per year (up to $60,000)
Form 3520: Up to 35% of the gross value of the distribution or transfer
Form 8865: $10,000 per form, per year
Form 8938: $10,000 per form (up to $60,000 for continued failure)

The IRS international information reporting penalties page lists the full penalty schedule. Penalties may be assessed initially even when a reasonable cause statement is attached; you may need to respond to IRS correspondence to have them abated.

For expats, this procedure is common when you hold an interest in a foreign corporation, trust, or partnership and are unaware of the reporting requirement. If you also owe tax or missed FBARs, Streamlined Filing or the Delinquent FBAR Submission Procedures may be the better path.