For taxpayers whose failure to report foreign accounts and income was non-willful, the IRS Streamlined Filing Compliance Procedures are often the most effective path back into compliance. The procedures come in two tracks, and choosing correctly — and documenting the choice — is where experienced counsel matters most.
Streamlined Foreign Offshore Procedures (SFOP). For taxpayers who meet the non-residency requirement, the SFOP can eliminate the miscellaneous offshore penalty entirely — requiring only amended or delinquent returns, delinquent information returns and FBARs, and a non-willfulness certification. We confirm eligibility, assemble the package, and draft a certification that withstands scrutiny.
Streamlined Domestic Offshore Procedures (SDOP). For eligible U.S.-resident taxpayers, the SDOP resolves years of non-compliance in exchange for a single reduced miscellaneous offshore penalty, in place of the FBAR and information-return penalties that could otherwise apply. We prepare the amended returns, calculate the penalty base, and build the supporting certification.
The certification of non-willful conduct is the linchpin — a signed, penalties-of-perjury statement explaining the taxpayer's specific facts and reasons for prior non-compliance. A generic narrative invites examination; a precise, well-supported one is often what carries the submission. But McLaughlin Legal can assist with all types of issues, including:
- FBAR & Foreign Accounts — U.S. persons with foreign financial accounts exceeding the reporting threshold must file the FinCEN Form 114 (FBAR). Willful and non-willful penalties can be severe. We help clients file delinquent FBARs, contest penalty assessments, and litigate FBAR disputes where necessary.
- FATCA & Form 8938 — The Foreign Account Tax Compliance Act requires many taxpayers to report specified foreign financial assets on Form 8938 — separately from, and in addition to, the FBAR. We untangle the overlapping thresholds and correct missed filings before they become an examination.
- Foreign Corporations & Form 5471 — Ownership in a controlled foreign corporation triggers Form 5471, plus Subpart F and GILTI inclusions and, where beneficial, a Section 962 election. We handle the reporting, the elections, and penalty defense for late or incomplete filings.
- Foreign Trusts & Gifts — Forms 3520 and 3520-A govern transactions with foreign trusts and the receipt of large foreign gifts or bequests. The penalties for late filing are among the harshest in the Code. We prepare these returns and pursue reasonable-cause abatement when they are assessed.
- Voluntary Disclosure Practice — For taxpayers whose conduct may have been willful, the IRS Voluntary Disclosure Practice can mitigate criminal exposure and cap civil penalties. We assess eligibility, manage the pre-clearance process, and negotiate the resulting examination.
- Foreign Tax Credits & Treaties — Relief from double taxation runs through the foreign tax credit (Form 1116) and the network of U.S. income-tax treaties. We evaluate treaty positions, tie-breaker residency rules, and treaty-based return disclosures on Form 8833.
- Expatriation & Exit Tax — U.S. citizens and long-term residents who expatriate may be subject to the Section 877A mark-to-market "exit tax" and Form 8854 reporting. We plan and document expatriation to manage covered-expatriate status and its consequences.
- International Penalty Defense — International information-return penalties are frequently over-assessed and sometimes procedurally defective. We challenge them through reasonable-cause arguments, administrative appeals, and jurisdictional defenses to assessment.
- Cross-Border Planning — For clients with inbound or outbound activity, we structure entities and transactions with the reporting consequences in mind — foreign partnerships (Form 8865), disregarded entities (Form 8858), and foreign-owned U.S. entities (Form 5472).
- International Audit & Controversy — When an examination or collection matter carries an international dimension, our tax-litigation practice represents you before the IRS and, where appropriate, the U.S. Tax Court — protecting your rights at every stage.
