The Streamlined Procedure in 2025 – A Guide for US Expats

Are you an American expat struggling to catch up on unfiled taxes? If so, the IRS Streamlined Filing Compliance Procedures (or the Streamlined Procedure) may be your solution to getting back on track penalty-free.
In this guide, we’ll cover everything you need to know about the Streamlined Procedure, including eligibility requirements, filing obligations, and why this program might fit you.

Understanding the Streamlined Procedure for Expats

The Streamlined Procedure was first introduced in 2012 and later expanded in 2014 to make it more accessible to a broader range of U.S. taxpayers living abroad. The goal of the initiative is to help taxpayers who unintentionally failed to meet their filing obligations. The program provides a penalty-free option to become compliant with tax laws.

To participate, you must prove that your non-compliance was non-willful. This means that your failure to file wasn’t due to deliberate actions, such as intentionally avoiding your tax obligations. Instead, you might have been unaware of the requirement to report worldwide income or misunderstood the filing process.
One benefit of the Streamlined Procedure for expats is its simplicity compared to other IRS programs. It allows you to file only a limited number of returns and FBARs (Reports of Foreign Bank and Financial Accounts) to become compliant, saving you time and stress.

As we’ll explain, the process involves filing your last three years of tax returns  and last six years of FBARs.

Who Qualifies for the Streamlined Procedure?

You must prove your non-compliance was not intentional.

The cornerstone of eligibility is proving that your non-compliance was due to non-willful conduct. This means your failure to file was not intentional or deliberate. To satisfy this requirement, you must complete Form 14653, where you provide a detailed explanation of your reasons for not meeting your tax obligations. Be honest and thorough, as this form is critical for demonstrating your eligibility.

You must meet specific residency requirements.

To qualify, you should not have lived in a U.S. home for at least one of the three most recent tax years. Additionally, during at least one of those years, you must have been physically present outside the United States for 330 days. These requirements ensure the program is targeted at expats who primarily live abroad.

You need a valid Social Security Number or ITIN.

Expats must have a valid Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) to participate in the Streamlined Procedure. Without one of these identification numbers, the IRS cannot process your submission. If you do not have an SSN or ITIN, you will need to apply for one before proceeding.

You cannot be under IRS examination or investigation.

If you are currently under an IRS civil examination or criminal investigation, you are not eligible for the Streamlined Procedure. These situations require different resolution pathways. If you’re unsure about your status, consult a tax professional to evaluate your circumstances and advise on the best course of action.

What Does the Process Involve?

Step 1: Gather Your Documents. To begin the Streamlined Procedure, you must collect several essential documents. As you have to file your federal tax returns for the past three years and FBARs (Reports of Foreign Bank and Financial Accounts) for the past six years (if applicable), this means collecting your financial information including income and bank statements respectively for these years. The FBAR is required if you held foreign financial accounts that exceeded $10,000 at any time during the year. Additionally, you must prepare Form 14653, which certifies your non-willful conduct and provides an explanation for your non-compliance.

Step 2: Complete Your Tax Returns and FBARs. Each tax return must be accurately prepared and reviewed to ensure there are no errors. Include all of your worldwide income and foreign financial information as required. For FBARs, which must be filed electronically through the FinCEN website.  It’s crucial to double-check account details, balances, and financial transactions to ensure accuracy and consistency across all documents. Don’t forget that you can also claim the Foreign Earned Income Exclusion or the Foreign Tax Credit to reduce your U.S. tax bill (often to nothing).

Step 3: Prepare Form 14653. Form 14653 requires a detailed explanation of why your non-compliance was not intentional. Clearly outline factors such as lack of knowledge about filing obligations or confusion over U.S. tax rules. Provide specific details and examples where necessary to strengthen your case. A vague or incomplete explanation may lead to delays or jeopardize your approval.

Step 4: Submit Your Documents. Once all forms are complete, the federal tax returns must be mailed to the IRS office designated for streamlined submissions. Ensure all necessary attachments are included, such as W-2s, 1099s, and any foreign financial documentation. FBARs, on the other hand, must be submitted electronically via FinCEN. Include proof of payment for any taxes owed along with your submission package.

Step 5: Wait for IRS Review. After submission, the IRS will review your case to determine eligibility and compliance. This process does not include formal acknowledgment of receipt, so it’s essential to keep copies of all submitted documents for your records. If your case meets the criteria, you will be brought back into compliance without penalties. However, you must pay any outstanding taxes and interest owed.

Step 6: Stay Compliant Going Forward. Once your submission is approved, it’s vital to stay compliant with U.S. tax laws moving forward. Ensure you file your federal tax returns and FBARs on time each year and report all worldwide income accurately. Future compliance demonstrates good faith and reduces the likelihood of any further issues with the IRS.

Common Challenges Expats Make when Submitting an IRS Streamlined Filing

While the Streamlined Filing Compliance Procedure offer a valuable opportunity for U.S. expats to become compliant, errors during the submission process are common and can jeopardize your case. Avoiding these pitfalls is essential to a smooth experience:

1. Neglecting to Fully Complete Form 14653

Form 14653 is at the heart of your submission. It requires a detailed explanation of why your non-compliance was not intentional. Failing to include sufficient details, using vague language, or omitting key points can lead to rejection. Take time to carefully articulate the specific circumstances that caused your non-compliance.

2. Omitting Required Tax Returns and FBARs

The IRS mandates the submission of three years of federal tax returns and six years of FBARs. Forgetting even one required document can result in an incomplete submission. Ensure every tax return and FBAR is properly filled out and accounted for before you submit your package.

3. Errors in FBAR Filing

FBARs must be submitted electronically through the FinCEN website. Errors such as incorrect account numbers, balances, or account holder details can raise flags with the IRS. Double-check all information against your financial records for accuracy.

4. Underreporting Income or Omitting Assets

Providing incomplete or inaccurate income and asset details undermines the credibility of your submission. Review your financial records thoroughly to ensure that all your income sources and foreign assets are reported.

5. Forgetting to Pay Taxes and Interest Owed

Although penalties are waived, any taxes and interest owed must be paid at the time of submission. Ignoring this requirement could result in delays, additional penalties, or outright rejection of your case.

6. Proceeding Without Professional Guidance

The rules and requirements for the Streamlined Procedure for expats can be complex, and even small errors can be costly. Working with an experienced tax professional ensures your submission is complete, accurate, and positioned for success.

By carefully reviewing your submission, double-checking all forms and details, and seeking professional advice when needed, you can significantly improve your chances of successfully resolving your tax compliance issues under the Streamlined Procedure.

Addressing Common Streamlined Procedure Misconceptions

Many expats misunderstand how the Streamlined Procedure works. One common misconception is that it eliminates all tax debt. While it’s true that penalties are waived, taxpayers are still required to pay any outstanding taxes and applicable interest. The program is designed to encourage compliance, not to erase financial obligations.

Another myth suggests that participating in the Streamlined Procedure will automatically trigger an audit. While the IRS has the authority to review any submission, entering the program does not inherently lead to an audit. The IRS’s primary goal is to help taxpayers resolve past non-compliance, not to penalize them unnecessarily.

Some expats also believe the program is only for those who have missed filing for several years. In reality, even if you’ve only missed filing for a single year, you may still be eligible, provided you meet the other criteria. The Streamlined Procedure is intended to accommodate a wide range of non-compliant situations, as long as they were non-willful.

What If You Don’t Qualify?

Filing Delinquent FBARs
If your compliance issues involve missed FBAR filings but your tax returns are up to date, you may qualify for the Delinquent FBAR Submission Procedures. This option allows you to submit the required FBARs without facing penalties, as long as there are no other compliance issues or unreported income. Ensure all information provided on your FBARs is accurate and complete to avoid potential scrutiny.

Submitting Delinquent International Information Returns
For taxpayers who missed filing international information returns, such as Forms 5471 or 3520, the Delinquent International Information Return Submission Procedures (DIIRSP) may be a suitable alternative. While penalties might still apply, demonstrating reasonable cause for your late filings can help mitigate these penalties. A detailed explanation of your circumstances is critical for this process.

Seeking Professional Guidance for Complex Cases
For higher-risk or more complex cases, working directly with a tax professional is highly recommended. Professionals can help identify the best resolution strategy tailored to your situation, whether it involves voluntary disclosures or making a reasonable cause argument to address penalties. Their expertise ensures that your submission is thorough and compliant with IRS guidelines.

Why Should Expats Seek Professional Guidance?

Although the Streamlined Procedure simplifies the process of becoming compliant, it’s not without challenges. U.S. tax laws are complex, especially when they involve foreign income and assets. This is where an expat specialist tax professional can make a big difference.

• First, they can evaluate your situation to determine if you qualify for the Streamlined Procedure and suggest the best course of action. They’ll look at your eligibility and make sure everything aligns with IRS requirements.
  
• Second, an expat tax professional ensures all your paperwork is accurate and complete. From preparing your tax returns to filing FBARs, they help avoid mistakes that could delay or jeopardize your submission.
  
• Finally, they assist with crafting a strong non-willfulness statement. This statement is essential for clearly explaining that you did not intentionally fail to comply, and professional input can add the clarity and detail the IRS expects.

The IRS Streamlined Filing Compliance Procedure offer an excellent way for U.S. expats to get back on track with their taxes without the fear of penalties. For those who qualify, it’s a chance to correct past mistakes and ensure future compliance with confidence. However, the process, while straightforward for some, can still come with challenges, especially for individuals with complex financial situations or foreign income sources.

Every expat’s circumstances are different, and getting professional guidance can make a significant difference. A qualified U.S. expat tax advisor who understands the unique needs of expats can help you navigate the process, identify opportunities to claim applicable exclusions or credits, and ensure that every detail of your submission is accurate.

If you think the Streamlined Procedure could be the right path for you, don’t delay. Gather your documents, seek expert advice, and take the necessary steps to resolve your tax compliance issues. Achieving compliance not only shields you from penalties but also brings peace of mind, knowing your tax obligations are met.

Frequently Asked Questions (FAQ)

Can I use the Streamlined Procedure if I have previously filed an FBAR?
Yes, you may still qualify for the Streamlined Procedure even if you filed FBARs in prior years, provided you meet all other eligibility requirements, including the non-willful nature of your non-compliance.

What happens if my non-compliance is deemed willful?
If the IRS determines that your failure to file was willful, you will not qualify for the Streamlined Procedure. In such cases, alternative compliance pathways like voluntary disclosure programs may be appropriate. Consulting a tax professional is essential to evaluate your options.

Do I need to hire a tax professional to participate in the Streamlined Procedure?
While it is not mandatory to hire a tax professional, it is highly recommended. A professional can help ensure your submissions are accurate and complete, minimizing the risk of rejection or further scrutiny by the IRS.

How long does the IRS take to review submissions under the Streamlined Procedure?
Processing times can vary, but most cases are reviewed within several months. The IRS does not provide formal acknowledgments for submissions, so it’s important to keep copies of all documents for your records.

What should I do if I cannot pay the taxes owed immediately?
If you cannot pay the full amount of taxes and interest owed, you may be able to set up a payment plan with the IRS. Submitting your returns through the Streamlined Procedure and arranging a payment plan demonstrates good faith in resolving your tax obligations.