Streamline Foreign Offshore Procedures are several procedures offered by the IRS in order to encourage voluntary disclosure of information by US citizens who did not meet their filing requirements, before the authorities receive this information from a third party.
The world is becoming one small global village, and this is not just a cliché. Today, with the simple push of a button, information flows quickly between international entities, disregarding physical obstacles and territorial boundaries. The US’s FACTA agreements with the rest of the world have expanded this phenomenon, and may involve taxation of uncooperative entities. In such a digital world, it is important to follow the demands.
There are two such procedures
OVDP
A procedure that was terminated in 2018 and was aimed at citizens with criminal or civic חשיפה who knowingly hid accounts and concealed income. The procedure offered protection against criminal liability and terms for solving tax dues and civic penalties.
SFOP
A procedure available to all US citizens and green card holders who unwittingly failed to report foreign accounts and income from such sources. The original 2012 procedure has changed over time, and currently offers exemption from a variety of penalties, and smooth entry to future filing processes.
The first condition for eligibility is the ‘non-willful’ component: “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.”
Another condition for eligibility is having resided outside the US for at least 330 days per year for each of the three tax years. Individuals who meet the general criteria and non-willful requirements, in addition to this condition, are eligible to the benefits of this procedure.
The procedure is mainly targeted at US citizens residing in Israel who have never filed, and is comprised of the following:
1. Filing 1040 form for the past three tax years;
2. Filing FBAR forms for the past 6 years;
3. Filing a non-willful conduct statement and statement of offshore residence
