# Question on the Streamlined Domestic Offshore Procedures



## borkanizo

Hello,

I am getting started on the SDOP (US resident), and have started to amend 3 years of tax returns (2011,2012,2013) and expect to get this done by the end of October .
My question is the following: The undisclosed accounts were inherited and I failed to file Form 3520 in a tax year (2008) that is prior to the years covered by the SDOP. 

My concern is that the IRS could assess penalties ( failing to file form 3520 on time triggers a penalty that can hit 25% of the inheritance\bequest) because the troubled tax year falls beyond the SDOP coverage.

Would it be advisable to amend 6 tax returns instead of 3 ? 

Thanks


----------



## BBCWatcher

Do the SDOP instructions speak to this scenario? _Generally_ these programs consider you caught up if you've fully complied with the scope of the program, so my inclination is to say no, you don't have to selectively go back beyond the SDOP time horizon. But the IRS's instructions are controlling, of course.


----------



## StewartPatton

No need to amend more than 3 returns. The SDOP is an amnesty program, so it assumes you have failed to file all sorts of stuff related to offshore accounts (eg, FBARs, 5471s, 8938s, 3520s, etc.). The deal the IRS makes with the SDOP is that all is forgiven if you amend 3 years and pay the 5% penalty.


----------



## borkanizo

That makes sense. the 5% penalty covers the non-compliance issue regardless of the troubled tax years and get you on the compliance track for the future . 

I came across this blog (deblislaw.com) and I was surprised to learn that some legal advisers do not counsel SDOP in many cases. The deblislaw tax blog suggests that
the Streamlined Compliance Procedures cannot be used to correct cefective returns that go back beyond the most Recent Three Tax Years.


----------



## BBCWatcher

The IRS's streamlined program cannot cure 100% of all tax-related ills, true, but what can? A tax lawyer? No. _All_ options have pros and cons.


----------



## freedom1

IF someone has one year of tax return to amend. And for any of their accounts offshore they had paid taxes to their local government and also, that other country has a tax treaty with the US (my case), isn't SDOP overkill?

The CPA I hired told me to submit a single amended return, claim a refund from Canada and a small payment to the US whilst at the same time, making an 8891 election.

Can anyone attest to getting in trouble for doing this?


----------



## Bevdeforges

To a certain extent, it depends on the amounts involved and whether or not it would be worth the IRS' time and effort pursuing them. Amending could simply raise your visibility on the IRS radar.

But I'm sure others have other opinions.
Cheers,
Bev


----------



## freedom1

Thanks. I mean if you factor in penalties - FBAR and otherwise, you can practically make every single case 'worth it'. I owed the IRS $1490 (NJ State $1100) for the one year. But I also overpaid $8100 to canada that I am claiming back from them. 

It's been 9 weeks since 'received' as I have been tracking my 1040X progress. For someone who's in the US on a temporary work visa, seems like leaving is the best option.



Bevdeforges said:


> To a certain extent, it depends on the amounts involved and whether or not it would be worth the IRS' time and effort pursuing them. Amending could simply raise your visibility on the IRS radar.
> 
> But I'm sure others have other opinions.
> Cheers,
> Bev


----------



## BBCWatcher

Amended returns represent business as usual. The streamlined program is a plea for potentially better treatment than one or more amended returns. If you're already happy with the interest and penalties (if any) you'd pay with a truthful amended tax filing, sure, do it.


----------



## someNri

borkanizo,
I am in the same boat as you. IMO Just what do what they ask for i.e. 3 years. Are you doing this by yourself?

I did my 2013 correctly. So does this mean I can do just 2 years in SDOP? (since 2010 is considered closed?) I too read posts from attorneys stating major risks doing the self-certification for non-willfulness. 

Is there any real world *data*/experiences on how Streamlined submissions are faring? I heard that those trying to transition from OVDP to SDOP are getting major push back. Hoping straight SDOP submissions from minnows won't mean inviting more trouble!




borkanizo said:


> Hello,
> 
> I am getting started on the SDOP (US resident), and have started to amend 3 years of tax returns (2011,2012,2013) and expect to get this done by the end of October .
> My question is the following: The undisclosed accounts were inherited and I failed to file Form 3520 in a tax year (2008) that is prior to the years covered by the SDOP.
> 
> My concern is that the IRS could assess penalties ( failing to file form 3520 on time triggers a penalty that can hit 25% of the inheritance\bequest) because the troubled tax year falls beyond the SDOP coverage.
> 
> Would it be advisable to amend 6 tax returns instead of 3 ?
> 
> Thanks


----------

