2020 SDOP Eligibility Requirements | SDOP Tax Lawyer & Attorney

In a recent article, I mentioned that Streamlined Domestic Offshore Procedures (“SDOP”) will continue to be the most important voluntary disclosure option in 2020 for US taxpayers who reside in the United States. However, not all taxpayers will qualify to participate in the 2020 SDOP. In this article, I will discuss the main 2020 SDOP eligibility requirements.

2020 SDOP Eligibility Requirements: Background Information

The IRS introduced Streamlined Domestic Offshore Procedures in June of 2014 as part of the most radical overhaul of offshore voluntary disclosure process since the introduction of the Offshore Voluntary Disclosure Program (“OVDP”) in 2009.

The IRS created SDOP first to supplement OVDP, not to replace it. The idea was to mitigate the OVDP’s rigidity by streamlining the voluntary disclosure process for taxpayers who non-willfully failed to comply with US international tax requirements.

Almost from the start, SDOP grew in popularity and quickly eclipsed OVDP. Tens of thousands of taxpayers utilized this option to lower IRS penalties in a relatively (i.e. relative to OVDP) fast and painless way. As a result, SDOP continues to exist even today while the 2014 OVDP was closed in September of 2018.

2020 SDOP Eligibility Requirements: Five Main Eligibility Requirements

In order to quality to participate in the SDOP, taxpayers must meet all of the following requirements: (1) US residence; (2) US tax return filing compliance; (3) US international tax noncompliance; (4) non-willfulness; and (5) no IRS examination. Let’s discuss each requirement in more detail.

2020 SDOP Eligibility Requirements: US Residence

In order to participate in SDOP, a taxpayer must be a US tax resident who did not meet any of non-residence tests of Streamlined Foreign Offshore Procedures. This requirements applies differently to two categories of taxpayers.

The first category consists of US citizens and US permanent residents (i.e. “green card” holders). In order to satisfy the 2020 SDOP eligibility requirements, these taxpayers must have a US abode and must not physically reside outside of the United States for more than 329 full days in each of the past three years. I explore what this means further in a future article on Streamlined Foreign Offshore Procedures.

The second category of taxpayers includes all individuals who are not US citizens and US permanent residents. In order for these individuals to be eligible to participate in SDOP, they must satisfy the substantial presence test in each of the past three years. Generally, under 26 U.S.C. §7701(b)(3), an individual meets the substantial presence test if the sum of the number of days on which such individual was present in the United States during the current year and the 2 preceding calendar years (when multiplied by the applicable multiplier) equals or exceeds 183 days. There are many exceptions to this rule, but they are outside of the scope of this article.

2020 SDOP Eligibility Requirements: Filing of US Tax Returns

In order to participate in the SDOP, a taxpayer must have previously filed a US tax return for each of the most recent three years for which the US tax return due date (or properly applied for extended due date) has passed. There is an exception to this rule for situations where a taxpayer’s income was below the tax return filing threshold and he was not required to file the tax return for that year.

2020 SDOP Eligibility Requirements: International Tax Noncompliance

An SDOP disclosure must have some relationship to US international tax noncompliance. A taxpayer must have failed to report income from a foreign financial asset and must have failed to file FBAR or any other US international information return, such as Forms 3520, 3520-A, 5471, 8865, 8938, 8621, 926, et cetera.

2020 SDOP Eligibility Requirements: Non-Willfulness

This is the most important and most difficult eligibility requirement for participating in SDOP: taxpayer’s violations of US international tax law must be non-willful. Moreover, they must be non-willful with respect to each aspect of the voluntary disclosure: FBARs, each international information return and foreign income. In other words, if a taxpayer was non-willful with respect to non-filing of Form 5471, but willful with respect to non-filing of FBARs, then, his entire eligibility to participate in SDOP is compromised.

SDOP provides the following definition of non-willfulness: “non-willful conduct is 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.” Obviously, proving non-willfulness is a matter highly dependent on facts and requires an individual approach to each client’s case. It is the job of an international tax attorney to make good use of the facts and determine whether non-willfulness can be established.

2020 SDOP Eligibility Requirements: Taxpayer Not Subject to Examination

Finally, a taxpayer who wishes to participate in SDOP must not be subject to an IRS civil examination or an IRS criminal investigation. Whether all relevant years are subject to an examination or just a few of them is irrelevant; it does not even matter whether the examination is focused on a particular international information return. In all of these cases, the taxpayer will most likely lose eligibility to conduct his voluntary disclosure through SDOP.

Contact Sherayzen Law Office for Professional Help With the Determination of Whether You Satisfied the 2020 SDOP Eligibility Requirements

If you have undisclosed foreign accounts or any other offshore assets and you wish to know whether you are eligible to participate in the 2020 SDOP, contact Sherayzen Law Office for professional legal help. Our experienced international tax law firm will thoroughly analyze your case, determine your SDOP eligibility, examine all alternative voluntary disclosure options and skillfully prepare the necessary tax and legal documents necessary to complete your offshore voluntary disclosure.

We have helped hundreds of US taxpayers with their offshore voluntary disclosures, and we can help you!

Contact Us Today to Schedule Your Confidential Consultation!

Premier Minneapolis Minnesota Voluntary Disclosure Lawyer | International Tax Attorney

Mr. Eugene Sherayzen, the founder and owner of Sherayzen Law Office, Ltd., is a premier Minneapolis Minnesota Voluntary Disclosure Lawyer. Why is this the case? Let’s explore the top five reasons for it.

Premier Minneapolis Minnesota Voluntary Disclosure Lawyer: Experience

Mr. Sherayzen started practicing law at the end of 2005. In other words, he has been an international tax lawyer for over 13 years. During this time, he has successfully conducted hundreds of voluntary disclosures for US taxpayers all around the world.

He is a highly experienced lawyer in every type of a voluntary disclosure: OVDP/OVDI (while these programs existed), Streamlined Domestic Offshore Procedures (“SDOP”), Streamlined Foreign Offshore Procedures (“SFOP”), Delinquent FBAR Submission Procedures, Delinquent International Information Return Submission Procedures and Reasonable Cause Disclosures.

During 2014-2016, Mr. Sherayzen also conducted the Transition to Streamlined Disclosure for some of his OVDP clients. Moreover, starting 2017, he has also helped his clients with the IRS audits of voluntary disclosures done pursuant to SDOP and SFOP. During all of these years, Mr. Sherayzen also helped clients with amendment of Forms 906 signed pursuant to OVDP or OVDI.

As a result of such an intense and diverse voluntary disclosure practice, Mr. Sherayzen has accumulated a tremendous, in many ways unique, amount of experience in offshore voluntary disclosures.

Premier Minneapolis Minnesota Voluntary Disclosure Lawyer: Knowledge

Knowledge comes with experience. Mr. Sherayzen may be considered a true expert on offshore voluntary disclosure. Not only does he possess a deep understanding of substantive US international tax law, but his extensive experience with offshore voluntary disclosures endowed him with a profound knowledge of the procedural aspects of offshore voluntary disclosures.

Premier Minneapolis Minnesota Voluntary Disclosure Lawyer: Ethical Creativity

This combination of knowledge and experience allows Mr. Sherayzen to devise creative ethical legal strategies for his clients’ offshore voluntary disclosures. Each strategy is customized based on the facts of each case. All pros and cons are carefully considered to achieve the necessary balance of risks and rewards. Potential IRS challenges are considered and prepared for. Each alternative strategy is discussed with each client in order to choose the most agreeable one to the client.

It should be emphasized that Mr. Sherayzen offers only those voluntary disclosure strategies which comply with the legal and ethical standards demanded by the IRS as well as the legal profession.

Premier Minneapolis Minnesota Voluntary Disclosure Lawyer: Customization

Mr. Sherayzen rejects “one size fits all” approach to offshore voluntary disclosure and strongly believes a case strategy must be considered only in light of the specific facts of each case. Too often, with dismay, he sees how many accountants and even lawyers herd their clients into one approach, charging a flat fee for it, without the proper consideration of specific facts of each case.

Mr. Sherayzen believes that each case is unique and deserves a special consideration of its special facts and circumstances. Each legal strategy must be adjusted to fit these facts and circumstances in order to produce the best result for the client.

Premier Minneapolis Minnesota Voluntary Disclosure Lawyer: Voluntary Disclosure Team

Mr. Sherayzen also counts on the support of a superb voluntary disclosure team of accountants and staff – a team which he has gradually built and trained over the past 13 years. He carefully chose each member of team and personally trained him to master certain aspects of a voluntary disclosure. The team is not trained only in their specific duties, but also to help each other, creating a sense of comradeship among Sherayzen Law Office employees. Everyone’s work goes through at least two levels of review to assure the highest quality. As a result, Mr. Sherayzen and his team are able to conduct and produce successful highly-efficient high-quality offshore voluntary disclosures.

Contact Mr. Sherayzen Today to Schedule Your Confidential Consultation!