IRS Form 14654 instructions for SDOP filing: How to certify non-willfulness under the domestic streamlined procedures

In 2014, the IRS changed the course of offshore compliance by launching the Streamlined Domestic Offshore Procedures – a relief path for US residents who had unknowingly failed to report foreign income and accounts. It offered a lifeline to those who made honest errors rather than deliberate omissions, replacing fear of massive penalties with a clear, structured way to make things right.

At the heart of that process is IRS Form 14654, the certification that proves a taxpayer’s non-willfulness and calculates the 5% miscellaneous penalty on unreported foreign assets. While the Streamlined Foreign Offshore Procedures use Form 14653 for Americans living abroad, Form 14654 applies only to domestic taxpayers bringing their filings back into full compliance.

In this article brought to you by Taxes for Expats, we will dive into:

• What Form 14654 covers, how the 5% base is computed, and why the signed certification controls eligibility and penalty relief
• Who needs it, the three-year return window, and the six-year FBAR span
• How to package payment and filings so the submission moves without delay
• How it differs from Form 14653 and when the Streamlined Foreign Offshore Procedures apply instead
• Key contacts and logistics – FBARs are due April 15 each year, with an automatic extension to October 15

Learn about our services or contact us for continued guidance on this domestic IRS amnesty program.

What is Form 14654

Many taxpayers feel anxious when they hear the word “penalty.”  That fear is common when trying to fix offshore reporting mistakes. During a webinar on the Streamlined Procedure, Wendy Christiansen, CPA, Tax Supervisor at Taxes for Expats, shared a message that put many minds at ease:

Her point explains the goal of IRS Form 14654. It's the SDOP certification that combines three critical elements: a sworn statement of non-willfulness, a computation of the 5% penalty, and a factual narrative explaining your situation. When you sign it, you confirm that your returns are corrected, your FBARs are filed, and you agree to the single 5 percent penalty that replaces much higher offshore penalties.

The form – officially called the Certification by US Person Residing in the United States for Streamlined Domestic Offshore Procedures – shows that any filing mistakes were non-willful. Even after your submission, the IRS can still examine your case if the facts don't match what you certified.

Who qualifies to file Form 14654

Courts often look at intent when judging FBAR and tax mistakes. In Bittner v. United States, the Supreme Court said penalties for non-willfulness apply per report, not per account. That same fairness shapes who can use the Streamlined Domestic Offshore Procedures and file IRS Form 14654 to fix past filing issues.

The Streamlined Domestic Offshore Procedures are specifically for taxpayers who do not meet the non-residency requirement. In other words, if you are a US citizen or green card holder who has been living in the United States, you use Form 14654 and follow the domestic procedures. Those who qualify for the foreign procedures because they live abroad use Form 14653 instead.

To help you decide whether SDOP is right for your situation, answer Yes or No to each question below:

1. Are you a US citizen or a green card holder?
2. Do you currently reside in the United States, and have you been living here for most of the covered tax years? If you lived abroad and met the physical presence test (330 full days outside the US in one of the last three years), you may qualify for the Streamlined Foreign Offshore Procedures instead.
3. Did you fail to report foreign income or file FBARs for non-willful reasons such as an honest mistake, misunderstanding, or reliance on bad advice?
4. Are you currently under IRS civil examination or criminal investigation?
5. Can you file or amend the last three years of tax returns and submit six years of FBARs?

How to interpret your answers

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Key sections of Form 14654

Form 14654 shows the IRS exactly what went wrong and how you are fixing it. Use this quick map to grasp each part before you sign under penalties of perjury.

Download Official IRS Form 14654  

Personal information and taxpayer details

List legal names, taxpayer identification numbers, and current addresses exactly as they appear on your returns. IRS Form 14654 also asks for contact details so the IRS can match your certification with the rest of your package.

If you filed a joint return, you will generally submit a joint certification unless you are filing separate amended returns. Joint filers certify together – meaning both spouses sign and agree to the non-willfulness narrative.

Non-willfulness certification statement

This is your factual narrative that explains why past failures were non-willful under the Streamlined Domestic Offshore Procedures. Keep it concrete with dates, account origins, advisors involved, and the moment you learned the rules.

The IRS requires you to provide specific facts and circumstances regarding your failure to report income, pay tax, and submit required information returns. While the narrative does not need to follow a particular format, including these elements helps build a clear non-willfulness case. For procedural questions, call the IRS streamlined hotline at 267-466-0020.

What to include in your statement:

• Identify the affected tax years and account details – specify when foreign accounts were opened and what type they were (bank account, investment account, pension, etc.)
• Explain the circumstances that led to non-compliance – relied on incorrect professional advice, misunderstood filing obligations, didn't know about FBAR requirements
• Describe when and how you discovered the requirement – conversation with a tax professional, news article about FBAR, expat tax webinar
• Detail the steps you took immediately after discovery – filed all missing FBARs, amended returns, and calculated the 5% penalty
• Confirm all filings are complete and consistent – state that all required FBARs and amended returns are filed, and that facts in your narrative match the submitted documents

Consistency warning: Your narrative must align perfectly with the facts in your amended returns and FBARs. If your statement says you didn't know about an account, but your tax returns show interest income from it, the IRS will spot the contradiction. Double-check dates, account balances, and income sources before you sign. Any mismatch can trigger an examination even after submission.

Summary of tax and FBAR submissions

You'll attach three years of amended income tax returns and six years of FBAR filings. These show the IRS that all missed reports are now complete and every dollar of foreign income is accounted for.

FBARs are due April 15 each year and automatically extended to October 15. FinCEN extended the deadline to April 15, 2027, for certain "signature authority only" filers (December 2025 notice).

Computation of miscellaneous offshore penalty (if any)

List the year-end value of each foreign financial asset in the covered tax and FBAR periods, total each year, then find the single highest aggregate year. The miscellaneous offshore penalty equals 5% of the highest total.

Understanding what goes into the penalty base can be tricky. Here's what commonly gets included and what doesn't:

Commonly included in the penalty base:

• Foreign bank accounts that should have been on FBAR
• Foreign securities, stocks, or mutual funds that should have been on Form 8938
• Foreign pension plans or retirement accounts that earned unreported income
• Any asset that generated unreported foreign income during the covered years

What does not count:

• Real estate held directly (unless it generated unreported rental income)
• Tangible assets like art, jewelry, or collectibles held abroad
• Domestic accounts at US banks (even if denominated in foreign currency)
• Assets properly reported on all original returns

The penalty is calculated once on the highest single-year total across the six FBAR and three tax years, then paid with your amended returns.

NOTE: If no assets meet the penalty definition in all covered years, the highest aggregate is zero, and the 5 percent amount is zero. The IRS may still assess additional tax and interest if amended returns show balances due.

Form 14654 may look intimidating. Before you panic, get the full picture of SDOP rules.

Read more

What to include in your non-willfulness statement

Writing the non-willfulness statement for Form 14654 is more than filling a space – it's your chance to show the IRS exactly how your situation fits the Streamlined Domestic Offshore Procedures. Taxpayers must certify that their conduct was non-willful to qualify for the program.

In IRS terms, non-willful conduct is behavior due to negligence, inadvertence, or mistake, or a good faith misunderstanding of legal duties. For SDOP, the certification must say the failures were non-willful and include a concise factual narrative that aligns with the documents you filed.

What counts as non-willful

Acceptable explanations include:

• Genuine misunderstanding of FBAR and Form 8938 rules – you believed bank reporting covered you, then corrected course once informed
• Reliance on incorrect professional advice – name the adviser and summarize the guidance you received, along with when you learned it was wrong
• Thinking that small foreign interest or pension accruals did not require reporting – and only later discovering the requirement to report all worldwide income

Here's how non-willful situations play out in practice:

• Inherited foreign account: Sarah inherited a small savings account in Germany from her grandmother in 2018. She had no idea US citizens were required to report foreign accounts or file FBARs. She discovered the requirement in 2023 and immediately contacted a CPA to file all missing returns.
• Misunderstood tax treaty: Carlos, a dual US–Mexico citizen, worked in Mexico for five years and paid Mexican income tax on all his earnings. He believed the US–Mexico tax treaty meant he did not need to file US returns. When he moved back to the US in 2024, he learned he was required to report his worldwide income to the IRS regardless of the treaty.
• Reliance on bad advice: Maria asked her US accountant in 2019 whether she needed to report her small checking account in Italy. The accountant told her it was unnecessary because the balance was under $10,000. In 2023, a different tax professional informed her that FBAR is required if the aggregate balance of all foreign accounts exceeds $10,000 at any point during the year.

What NOT to do in your statement

Avoid these common mistakes that can sink your SDOP submission:

• Vague excuses – “I didn’t know” without explaining why
• Blaming without details – “My accountant never told me” without naming who or what guidance you received
• Contradictions – saying you didn’t know about an account when your tax returns show interest income from it
• Emotional language – stick to facts, not feelings or lengthy explanations about stress

How to make your statement credible

Outline the events and dates that led to the oversight. Attach bank letters, emails, or records that verify your account. Show that you've filed all required FBARs and amended returns. Keep your writing clear and direct.

Use this structure: mistaken belief → why it seemed reasonable → how you discovered the error → immediate steps you took to correct it.

Form 14654 vs. Form 14653

What happens when two Americans make the same tax mistake, but one lives in Texas and the other lives in Seoul? Both can fix it through the IRS streamlined procedures, but they need to know which form to use so they don’t make another mistake.

When to seek professional help

Filing under the IRS streamlined procedures can feel simple at first, but one small error can cause delays or penalties.

At Taxes for Expats, we've guided over 2,200 Americans through Streamlined Procedures since 2012. Our CPAs handle your non-willful certification, penalty calculations, amended returns, and FBAR filings – so you can move from uncertainty to confident compliance.

Here's what we handle for you:

• Non-willful certification – We prepare your factual narrative based on your circumstances, aligned with IRS expectations
• Accurate 5% penalty calculation – We ensure your penalty base includes only what's required
• Complete filing package – All required tax returns, FBARs, and certifications prepared and reviewed
• Expert review process – Every submission is checked by CPAs who specialize in Streamlined Procedures

Red flags that indicate willfulness:

If any of these apply, streamlined procedures are not available:

• You intentionally hid assets or income from the IRS
• You used offshore accounts to evade US taxes or moved money to avoid detection
• You ignored multiple warnings from your bank, accountant, or the IRS about reporting requirements
• You filed false returns that omitted foreign income you knew about
• You were previously audited or warned about FBAR or foreign income reporting

If these describe your situation, you must apply through the IRS Criminal Investigation Voluntary Disclosure Practice to avoid criminal prosecution.

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