Background and evolution

After heightened enforcement post-2008, the IRS created several programs to bring taxpayers into compliance. The 2014 Offshore Voluntary Disclosure Program (OVDP) was the best-known initiative but the IRS closed that program in 2018. Today the common pathways are the Streamlined Filing Compliance Procedures for non‑willful cases and the IRS Criminal Investigation Voluntary Disclosure Practice for cases with potential willfulness (IRS guidance: https://www.irs.gov/compliance/criminal-investigation/voluntary-disclosure-practice; Streamlined info: https://www.irs.gov/individuals/international-taxpayers/streamlined-filing-compliance-procedures).

How the programs work — step by step

  1. Case evaluation: A tax professional reviews facts to assess whether omissions look willful (intentional) or non‑willful. That classification largely determines which procedure fits.
  2. Assemble documents: Gather bank statements, foreign tax returns, brokerage records, past U.S. returns, and correspondence with foreign institutions.
  3. Prepare submissions: Typical filings include amended U.S. returns (Form 1040-X), Form 8938 (Statement of Specified Foreign Financial Assets) when required, and FBAR (FinCEN Form 114) filed electronically via BSA E-Filing (FinCEN guidance: https://www.fincen.gov/report-foreign-bank-and-financial-accounts).
  4. Select the program: If non‑willful, Streamlined procedures may allow reduced or no penalties but require strict eligibility. If there is potential criminal exposure, the Criminal Investigation Voluntary Disclosure Practice may be appropriate.
  5. Payment and resolution: Expect to pay back taxes, interest, and any assessed penalties; the exact amount depends on program and facts.

Key differences between common options

In-practice example

In my practice I guided a U.S. resident with small rental income held in a foreign account through the Streamlined process: we filed three amended returns, submitted six years of FBARs, paid tax and interest — and avoided large civil penalties because the IRS accepted the non‑willful certification.

Who is eligible

Common penalties to know

Tips from a practitioner

  • Don’t delay an eligibility check: Early evaluation can preserve options (Streamlined vs. voluntary disclosure to Criminal Investigation).
  • Keep meticulous records: Bank statements and foreign tax filings materially shorten resolution time.
  • Use experienced counsel for possible willful cases: Criminal exposure requires coordinated legal and tax strategy.

Common mistakes and misconceptions

  • “I can fix it informally and avoid disclosure.” Incorrect — informal compliance without following an accepted procedure often leaves subjects exposed to higher penalties or enforcement.
  • “All offshore errors are handled the same.” Not true — the taxpayer’s intent (willful vs non‑willful) drives which program is appropriate.

FAQ — short answers

  • Will participating guarantee immunity? No. Proper disclosure reduces civil penalties and greatly lowers criminal risk, but it does not automatically guarantee immunity from prosecution in all cases.
  • What forms will I likely file? Expect amended returns (Form 1040-X), FBAR (FinCEN Form 114), and Form 8938 when applicable.
  • Is there a time limit to apply? Programs remain available, but eligibility rules and IRS enforcement priorities change. Act promptly to preserve options.

Internal resources

Authoritative sources

Professional disclaimer

This article is educational and not a substitute for legal or tax advice. For case‑specific guidance, consult a qualified tax attorney or CPA experienced in international and criminal tax matters.