IRS Streamlined Filing from the UK: how to catch up on US taxes

A FATCA letter from a UK bank means the bank has found a sign that you may be a US person and must confirm your status so it can decide whether to report your account. It is not a letter from the IRS, it is not a penalty, and it does not stop you using the Streamlined procedures. It does mean the clock is running.

Why UK banks send it

FATCA is the Foreign Account Tax Compliance Act, a 2010 US law that requires financial institutions outside the United States to identify and report accounts held by US persons. The UK implements it through an intergovernmental agreement signed in September 2012. HMRC explains the framework on its page for the UK-US automatic exchange of information agreement, and the US Treasury publishes the agreements on its FATCA resource page.

Under the agreement a UK institution must look through its records for US indicia. US indicia are the facts that suggest a customer is a US person. They include:

• a US place of birth on your passport or account opening form;
• US citizenship or residence recorded anywhere on file;
• a US address, including a care-of or post office box address;
• a US telephone number;
• standing instructions to pay money to an account in the United States;
• a power of attorney or signatory with a US address.

A US place of birth is the one that catches most people. The bank does not know or care whether you left at six months old. It has to ask.

The W-9 or W-8BEN choice

The letter usually asks you to complete a self-certification, and often encloses one of two IRS forms. Form W-9 is the form a US person uses to give a financial institution their name and taxpayer identification number. Form W-8BEN is the form a person who is not a US person uses to certify foreign status. The IRS publishes both: Form W-9 and Form W-8BEN.

This is not a choice in the ordinary sense. If you are a US citizen or a green card holder, the W-9 is the only truthful form. The W-8BEN is signed under penalty of perjury. Signing it when you are a US citizen is a false statement, and it is exactly the kind of fact the IRS later relies on to say a failure to file was wilful. That would close the Streamlined route to you.

If you were born in the United States and are no longer a citizen, the bank will want to see your Certificate of Loss of Nationality before it accepts a W-8BEN. If you are not sure whether you are a citizen, find out before you sign anything. The section on accidental Americans below explains how.

What the bank reports, and to whom

The bank reports to HMRC, not directly to the IRS. HMRC then passes the data to the IRS once a year. For each reportable account the report gives your name, address, US taxpayer identification number if the bank holds one, the account number, the balance or value at the end of the year, and the interest, dividends or sale proceeds paid during it. HMRC sets out the detail in its International Exchange of Information Manual.

What happens if you ignore it

Ignoring the letter does not keep the account out of the report. An account with US indicia and no reply is generally treated as reportable, so it is reported anyway, without your taxpayer number. Banks chase, usually two or three times. Some then restrict the account, decline new products or close it. None of that touches the underlying duty to file.

The order to do things in

1. Do not sign a W-8BEN unless you are certain you are not a US person.
2. Establish your status: citizen, green card holder, or neither.
3. Take advice on which catch-up route fits before you file anything with the IRS.
4. Reply to the bank truthfully. If you are a US person without a Social Security number, tell the bank you are applying for one.
5. Start the catch-up filing. Returning a W-9 while still unfiled is honest, but it puts your name in front of the IRS, so do not leave a long gap.

Ongoing FATCA and FBAR reporting once you are up to date is covered in our guide to FBAR and FATCA reporting for Americans in the UK.

There are two versions of the Streamlined procedures, and where you have been living decides which you use. The Streamlined Foreign Offshore Procedures are for people who meet a non-residency test and carry no penalty. The Streamlined Domestic Offshore Procedures are for people who do not meet that test and carry a penalty of 5% of their foreign financial assets.

Almost everyone who has been living in the UK for more than a year or two uses the Foreign version. The Domestic version matters if you have recently moved to the UK from the United States, or if you spend long periods in America each year.

How the 5% Domestic penalty works

The IRS calls it the miscellaneous offshore penalty. You total the year-end values of your reportable foreign financial assets for each year in the three-year return period and the six-year FBAR period. You take the highest of those totals and pay 5% of it. The IRS sets out the calculation on its page for US taxpayers residing in the United States.

Take an example. Suppose Marcus moved from Chicago to Manchester in March 2025 and kept filing US returns but never reported the UK accounts he inherited in 2021. His highest year-end total across the six years was $240,000. Under the Domestic version he would pay $12,000 on top of the tax and interest. Under the Foreign version he would pay no penalty at all.

The point people miss about the Domestic version

The Domestic version is closed to anyone who simply did not file. It requires that you previously filed a US return for each of the last three years, if one was required. A person living in the United States who filed nothing cannot use it. That matters for new arrivals in the UK: if you do not yet meet the non-residency test and you have unfiled years, neither version fits today.

Sometimes waiting is legitimate

The non-residency test looks at the most recent three years for which the due date has passed. As each filing deadline passes, a new year enters the window. Someone who moved to the UK in mid-2025 may fail the test for 2023, 2024 and 2025 but pass it for 2026. Once the 2026 return falls due in 2027, the Foreign version opens. Whether to wait is a judgement, because the IRS could make contact first. It is a decision to take with advice and with the numbers in front of you.

If you are an executive or founder who has just relocated, the first-year position is more involved. Our guide to US and UK tax for founders and executives covers the move itself.

You qualify for the Streamlined Foreign Offshore Procedures if you meet four conditions: you pass the non-residency test, your failure to file was non-wilful, the IRS has not begun a civil examination or criminal investigation of you, and you have a valid taxpayer identification number. All four must be true on the day you submit.

1. The non-residency test and the 330-day rule

For US citizens and green card holders, the test is this. In at least one of the most recent three years for which the US tax return due date has passed, you did not have a US abode and you were physically outside the United States for at least 330 full days. The IRS states the rule, with its own examples, on its page for US taxpayers residing outside the United States.

Four details decide most cases.

• One year is enough. You need to pass in any one of the three years, not all three.
• It is 330 days outside, not 35 days inside. In a 365-day year you can be in the United States for part or all of up to 35 days. In a leap year, 36.
• Days must be full days. A full day outside is a 24-hour period from midnight to midnight spent wholly outside the United States. The day you land in New York and the day you fly home are both days you were partly in the country, so neither counts towards the 330.
• The year is the calendar year. This differs from the foreign earned income exclusion, which allows any twelve-month period.

An abode is, broadly, where your home, family and economic life are. The IRS borrows the meaning from the foreign earned income rules in Treasury Regulation 1.911-2. Owning a flat in Florida that you let out, or visiting your parents each summer, does not by itself give you a US abode. Keeping a home in the United States that your spouse and children live in probably does.

Worked examples

Passing on one year. Suppose Hannah, a US citizen, has lived in Bristol since 2015. She submits in November 2026, so her three years are 2023, 2024 and 2025. In 2023 she spent 44 days in the United States caring for her father. In 2024 she spent 12 days there, and in 2025 she spent 38. She fails in 2023 and 2025 but passes in 2024, with 354 full days outside in a leap year. She meets the test.

Failing by travel days. Suppose Tom makes four work trips a year to Boston. Each trip is seven nights. He counts 28 days. But each trip touches eight calendar days, so the true figure is 32, and a ninth day from a delayed flight would make 33. He is still inside the limit, but only just. Count from passport stamps and airline records, not from memory.

The recent mover. Suppose Aisha moved from Seattle to Edinburgh on 10 February 2025 and has not been back. For 2025 she was outside the United States for only 324 full days, so she fails for 2025, and for 2023 and 2024 she lived in America. She does not qualify for the Foreign version until the 2026 return is due.

Married couples. If you file a joint return, both spouses must meet the test. Suppose Ben lives in Leeds year-round but his wife Carla spent five months in Texas in each of the three years. A joint Streamlined Foreign submission is not available to them. Separate returns may be, and that changes the tax, so it needs working through.

People who are not citizens or green card holders. A different test applies: in at least one of the three years you did not meet the substantial presence test. This is rare for UK residents and usually concerns former US visa holders.

2. Non-wilful conduct

The IRS defines non-wilful conduct as conduct due to negligence, inadvertence or mistake, or conduct that results from a good faith misunderstanding of what the law requires. This is the heart of the programme and has its own section below.

3. Not under examination or investigation

If the IRS has started a civil examination of your returns for any year, you are not eligible. It does not matter whether the examination concerns foreign accounts. A criminal investigation by IRS Criminal Investigation also rules you out. A letter from your bank does not, and neither does a routine IRS notice about a balance or a missing form. Where the line falls in between is covered later in this guide.

4. A valid taxpayer identification number

Every return in the submission needs a valid taxpayer identification number. For a US citizen or green card holder that is a Social Security number. The IRS says in its Streamlined Foreign Offshore questions and answers that a submission without a valid number does not receive the favourable penalty terms. A person who is not eligible for a Social Security number may send an ITIN application with the submission. A US citizen cannot do that; citizens must obtain the Social Security number first.

Who does not need the procedures at all

Not everyone who has not filed was required to. A US return is required only when your gross income exceeds the filing threshold for your filing status, which for a single person under 65 roughly equals the standard deduction, or when you have $400 or more of net self-employment income. A married person filing separately has a threshold of only $5. An FBAR is required only when your foreign accounts together exceeded $10,000 at some point in the year. If you were under every threshold for a year, there is nothing to catch up for that year.

Non-wilful means you did not know about the requirement and were not deliberately avoiding finding out. Form 14653 is where you certify that under penalty of perjury and explain, in a written narrative, exactly why you did not file. The narrative is the most important document in the submission, and a vague or copied one is the commonest reason a submission runs into trouble.

How the IRS and the courts define wilfulness

The IRS definition of non-wilful conduct is short: negligence, inadvertence, mistake, or a good faith misunderstanding of the law. The definition of wilful conduct is wider than most people expect. In civil FBAR cases the US courts have held that wilfulness covers three things:

• Knowing violation. You knew you had to file and chose not to.
• Recklessness. You ran an obvious risk that you were breaking the law, a risk you should have known about.
• Wilful blindness. Wilful blindness is a conscious effort to avoid learning about a requirement you suspected existed.

The IRS applies the same three-part standard in its own manual, at Internal Revenue Manual 4.26.16. Federal appeal courts adopted it in cases including United States v. Williams, Bedrosian v. United States and United States v. Horowitz. The burden of proving wilfulness is on the government, and in civil cases the standard is the balance of probabilities, not beyond reasonable doubt.

The facts that point towards wilfulness

No single fact decides it. These are the ones that carry weight:

• You filed US returns and ticked "No" to the question on Schedule B asking whether you had a foreign account. The courts have treated a signed return with that answer as strong evidence of recklessness, even where the taxpayer never read the question.
• You signed a W-8BEN or told a bank you were not a US person when you were.
• An accountant, a relative or a bank told you about the filing duty and you did nothing for years.
• You moved money, closed accounts or used another person's name after learning about FATCA.
• You held accounts in places you had no connection with.
• You reported some foreign accounts and left out others.

The facts that point towards non-wilfulness

• You left the United States as a child, or were born abroad, and have never filed a US return or worked in America.
• Your accounts are ordinary ones in the country where you live: a current account, a mortgage, a workplace pension, an ISA.
• You paid UK tax in full on all your income.
• Your UK accountant never raised US filing, and you had no US adviser.
• You acted promptly once you found out.

Having been unaware is not automatically enough, and having had one warning is not automatically fatal. It is the whole picture that counts. This is the judgement we spend the most time on before taking on a Streamlined case, because certifying non-wilfulness when the facts say otherwise is worse than not filing.

What Form 14653 asks for

Form 14653 is the Certification by US Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures. It has four working parts:

1. the tax and interest due for each of the three years;
2. a statement that you meet the non-residency test, with your days in the United States for any year you rely on;
3. the certifications themselves, including that all required FBARs have now been filed and that your failures were non-wilful;
4. the narrative statement of facts.

For the narrative, the form asks for the specific reasons for your failure to report all income, pay all tax and file all required returns, including FBARs. It asks for the whole story, including facts that are favourable and unfavourable to you. It asks for your personal background, your financial background, the source of the money in your foreign accounts, and your contact with those accounts. If you relied on a professional adviser, it asks for their name and contact details and a summary of what they advised. Spouses with different reasons must each give their own.

What a good narrative contains

• Your history with the United States. Where you were born, when you left, how you hold citizenship or a green card, when you last lived or worked there.
• Your history with US tax. Whether you ever filed, who prepared it, what you understood your position to be and why.
• Each account and where the money came from. Salary, savings, an inheritance, the sale of a home. Ordinary sources are reassuring; say so plainly.
• The moment you found out. The date, what prompted it, and what you did next. A gap between finding out and filing needs explaining.
• The awkward facts. A Schedule B answered "No", a conversation you half remember, a W-8BEN signed years ago. State them and explain them. An examiner who finds an omitted fact reads the whole statement differently.

A sound narrative is usually one to three pages. It is written in the first person, in plain words, with dates.

What gets rejected or draws an examination

• One-line statements such as "I was not aware of the requirement".
• Template wording that appears in other people's submissions.
• Legal argument in place of facts.
• A statement that contradicts the returns, for example claiming no knowledge of US filing when earlier returns were filed with Schedule B attached.
• Blaming an adviser without naming them or saying what they were told.
• No explanation of where the money came from.

The IRS has sent back certifications it considered incomplete and asked for more detail, and it reviews certifications for signs of wilfulness. The form itself records your acknowledgement that if the IRS finds evidence of wilfulness, fraud or criminal conduct it may open an examination or investigation.

If you are not sure you can certify

Then stop before filing anything. If your position may be wilful, speak to a US tax attorney before you speak to anyone else, because attorney-client privilege protects what you tell them in a way that a tax preparer's does not. The route for wilful cases is described in the section on alternatives.

You file US tax returns for the most recent three years whose due date has passed, and FBARs for the most recent six years whose due date has passed. The two periods are counted separately, from the day you submit, and they move forward each time a deadline passes.

The three-year return period

The rule is the most recent three years for which the US tax return due date, or a properly applied for extended due date, has passed. A US return for a calendar year is due on 15 April of the following year. People living abroad get an automatic extension to 15 June. A further extension to 15 October is available on request using Form 4868, as the IRS explains in its guidance for taxpayers living abroad.

The extension point is a real planning choice. A valid extension keeps the latest year out of the Streamlined package, so it can be filed as an ordinary, on-time return. That can shift which three years are covered. If an older year contains an awkward item, such as a pension lump sum or a house sale, the choice affects the tax bill.

The six-year FBAR period

The rule is the most recent six years for which the FBAR due date has passed. An FBAR is due on 15 April after the calendar year it reports, with an automatic extension to 15 October that you do not need to request. The IRS sets this out on its FBAR page.

In practice the 2025 FBAR is treated as due on 15 October 2026. So a submission made before that date covers 2019 to 2024, with the 2025 FBAR filed on time alongside. A submission made after it covers 2020 to 2025. You need an FBAR only for the years in which your accounts together went over $10,000 at any point. A year under the threshold needs no form.

What goes in each tax return

Each of the three returns is a complete Form 1040, prepared as carefully as an ordinary return. For a UK resident it usually includes:

• Form 1116, the foreign tax credit, or Form 2555, the foreign earned income exclusion, or both;
• Schedule B, with the foreign account questions answered "Yes";
• Form 8938, the statement of specified foreign financial assets, if your assets pass the threshold. For a single person living abroad that is more than $200,000 on the last day of the year or more than $300,000 at any time. For joint filers it is $400,000 and $600,000;
• Form 8621 for each UK fund, investment trust or exchange-traded fund that is a passive foreign investment company;
• Form 8833 where a treaty position is claimed, for example on a UK pension;
• Form 5471 if you own 10% or more of a UK limited company;
• Form 3520 for certain foreign trusts and for large gifts or inheritances from non-US persons.

If you filed returns for some years but left things out, you file amended returns on Form 1040-X for those years instead. A mixed package of original and amended returns is acceptable under the Foreign version.

What goes in each FBAR

Each FBAR lists every foreign financial account you owned or could sign on during the year, with the bank's name and address, the account number and the highest balance in the year, converted to dollars at the Treasury year-end rate. Accounts that count include current and savings accounts, cash and stocks and shares ISAs, premium bonds, investment platform accounts, most UK pensions that you can identify as an account, and joint accounts in full. A company account you can sign on counts too, even though the money is not yours.

Years before the window

The IRS does not ask for them under the Streamlined procedures, and you do not volunteer them. They are not wiped away in law. An unfiled year has no time limit for assessment under section 6501 of the Internal Revenue Code. In practice the IRS treats a properly made Streamlined submission as bringing you into compliance and does not go back further unless it finds wilfulness or fraud. Your narrative still covers the whole period honestly.

Payment of tax and interest

You pay the full tax shown on the three returns, with interest from each original due date. The IRS underpayment rate is set quarterly and is 7% a year for the last quarter of 2026, compounded daily, according to its table of quarterly interest rates. On a nil return there is nothing to pay.

The tax returns, the information returns, Form 14653 and the payment go to the IRS on paper, by post, to a dedicated address in Austin, Texas. The FBARs go separately and electronically to FinCEN. As of October 2026 the IRS instructions still say that electronic submissions of the returns will not be accepted.

This surprises people, because ordinary returns for recent years can be e-filed and prior-year paper returns are slow. We checked the IRS instructions, last reviewed in July 2026, and the position is unchanged. A Streamlined package that is e-filed is processed as an ordinary late return, outside the programme, and loses the penalty protection.

Step 1: file the six FBARs online

FBARs are filed through FinCEN's BSA E-Filing System for individuals. No account is needed. On each form, in the box asking the reason for filing late, you select "Other" and type "Streamlined Filing Compliance Procedures" in the explanation box. You receive a confirmation for each filing by email. Keep all six.

File the FBARs before you sign Form 14653. The form asks you to certify that all required FBARs have been filed, so they must be done first.

Step 2: assemble the paper package

1. Print each of the three returns, complete with every schedule and information return.
2. Write "Streamlined Foreign Offshore" in red ink at the top of the first page of each return and each separate information return. The IRS calls this critical to routing the package correctly.
3. Sign and date each return in ink. Joint returns need both signatures.
4. Complete and sign Form 14653. The original signed form goes in the package, and a copy is attached to each tax return and each information return. Copies are not attached to the FBARs.
5. Include payment of the tax and interest, with your taxpayer identification number on it.
6. Include any retirement plan deferral elections the returns rely on.

Step 3: post it to the Streamlined address

The address given by the IRS is:

• Internal Revenue Service
• 3651 South I-H 35
• Stop 6063 AUSC
• Attn: Streamlined Foreign Offshore
• Austin, TX 78741

Use a tracked international courier and keep the delivery receipt. That receipt is the only proof of filing you will get, because the IRS does not acknowledge Streamlined submissions. Keep a complete copy of everything sent. This address is only for the Streamlined package. Every later return goes through the normal channels and can be e-filed.

Paying from the UK

The instructions describe a cheque. Few UK residents have a US dollar chequebook. In practice people pay in one of three ways: a cheque drawn on a US bank account if they have one, an electronic payment through the IRS online payment systems with the confirmation enclosed in the package, or an international wire. Whichever you use, the payment must be identifiable to the right person and the right tax year. A payment that sits unmatched generates interest notices later.

Information returns normally filed elsewhere

Some forms, such as Form 3520, normally go to a different IRS address from the tax return. Under the Streamlined procedures they travel with the package to Austin, marked in red like the returns.

Correcting a submission you have already made

If you find an error after posting, you can amend. The amended returns are marked "Amended Streamlined Foreign Offshore" in red, Form 14653 is marked "amended", the narrative explains the error, and the package goes to the same Austin address. FBAR errors are corrected by filing amended FBARs with FinCEN.

How we handle it

We prepare the three returns and six FBARs from one set of records, so the account figures on the FBARs, Form 8938 and the returns agree with each other and with what your banks have reported. We draft the Form 14653 narrative from a structured conversation with you, and you approve every word before you sign. Then we assemble the package in the order the IRS expects and give you courier instructions. Email hello@usuktaxexperts.com to start.

Most UK residents with ordinary employment income owe no US tax for the three years, because the UK income tax they have already paid is credited against the US tax on the same income and is usually larger. The exceptions are items the UK taxes lightly or not at all: ISAs, UK-based investment funds, pension lump sums, the sale of a home and some children's accounts.

Why the bill is often nil

Two reliefs do the work. The foreign tax credit is a dollar-for-dollar reduction of US tax for income tax paid to another country on the same income, claimed on Form 1116. The foreign earned income exclusion removes a capped amount of foreign salary or self-employment income from US tax, claimed on Form 2555. The IRS explains each in its guidance on the foreign tax credit and the foreign earned income exclusion. The exclusion limit is indexed each year: $120,000 for 2023, $126,500 for 2024, $130,000 for 2025 and $132,900 for 2026.

Take an example. Suppose Priya, single, earned a salary of £60,000 in 2025 and had no other income. Her UK income tax was about £11,400. At an illustrative rate of $1.30 to the pound, her salary is $78,000 and her UK tax about $14,900. After the 2025 standard deduction of $15,750, her US tax would be roughly $8,600. The credit for UK tax more than covers it. She owes nothing, and carries the unused credit forward for up to ten years.

For UK taxpayers the credit is usually the better choice than the exclusion. It leaves unused credits for later years, it keeps you eligible for the refundable part of the child tax credit, and it works for pension contributions. The choice has lasting effects, because revoking the exclusion once claimed restricts you from claiming it again for five years without IRS consent. Our guide to filing US and UK tax returns together goes through the choice in detail.

Where tax is due: ISAs

An ISA is tax-free in the UK and fully taxable in the United States. Interest, dividends and gains inside an Individual Savings Account are reported on the US return each year, and there is no UK tax to credit against them. On a cash ISA the amount is usually small. On a stocks and shares ISA it depends on what is held inside.

Where tax is due: UK funds and PFICs

A PFIC is a passive foreign investment company, which in practice includes almost every UK-domiciled unit trust, OEIC, investment trust and exchange-traded fund. Each one is reported on Form 8621. Under the default rules, gains and large distributions are spread back over the holding period, taxed at the highest rate for each year, and charged interest. The result can exceed what the same gain would cost in a US fund several times over.

There are reliefs. If your PFICs together are worth $25,000 or less at the year end, or $50,000 on a joint return, and you received no excess distribution, annual reporting is generally not required. A mark-to-market election can replace the default regime going forward. Which election to make on a first-time filing is one of the bigger decisions in a Streamlined case. Our PFIC reporting service deals with it.

Where tax is due: UK pension lump sums

In the UK you can usually take up to a quarter of a pension as a tax-free lump sum. The US treatment is contested. One reading of the UK-US tax treaty gives the UK the sole right to tax a lump sum from a UK scheme. The other reading, which follows the treaty's saving clause, lets the United States tax its own citizens regardless. Advisers take both positions, and a treaty position must be disclosed on Form 8833. If a lump sum falls inside your three years, it needs a deliberate decision. See our guide to the US-UK double taxation treaty and our pensions service.

Where tax is due: the sale of a UK home

Private residence relief usually removes UK capital gains tax on your main home. The US gives its own relief, but it is capped: the first $250,000 of gain is excluded, or $500,000 on a joint return, if you owned and lived in the home for two of the previous five years. Gain above the cap is taxable, with no UK tax to credit. The gain is measured in dollars, so a fall in the pound can shrink it and a rise can swell it. Paying off a sterling mortgage can also create a separate taxable currency gain. Our property gains service covers these calculations.

Where tax is due: children's accounts and other items

• Children who are US citizens have their own filing duties. Income in a Junior ISA or child trust fund is the child's, and above a modest threshold it can be taxed at the parents' rate.
• Self-employment. US self-employment tax of 15.3% is not reduced by the foreign tax credit. UK residents paying UK National Insurance are generally exempt under the US-UK social security agreement, but the exemption should be supported with a certificate of coverage from HMRC.
• The 3.8% net investment income tax applies to investment income above $200,000 for a single filer. The IRS position is that foreign tax credits do not reduce it. Some taxpayers have won treaty-based claims in court, and the point is not settled.
• Owning a UK company brings the US rules on controlled foreign corporations, which can tax company profits on you personally.
• Premium bond prizes and other UK tax-free income are taxable in the United States.

Refunds

Sometimes the returns show a refund, most often from the refundable child tax credit for children with Social Security numbers. A refund can generally be claimed only on a return filed within three years of its original due date, so the oldest year in the package may be too late for a refund while the later two are in time.

A Streamlined Foreign Offshore submission removes every civil penalty for the years it covers: late filing, late payment, accuracy, international information returns and FBARs. Outside the programme those penalties are assessed separately, form by form and year by year, and for someone with ordinary UK accounts they can exceed the tax many times over.

The late-filing figures come from the IRS page on the failure to file penalty. The FBAR figures are set by 31 USC 5321 and adjusted for inflation in 31 CFR 1010.821. The Form 8938 figures are in the IRS summary of FATCA reporting for US taxpayers. The inflation-adjusted amounts change, usually each January, so check the current table.

Why a nil-tax filer still has exposure

The late-filing and late-payment penalties are percentages of unpaid tax. If no tax is due, they are nil. That is why many UK residents assume there is nothing to worry about. The exposure is in the information forms. FBAR and Form 8938 penalties are fixed amounts that apply whether or not any tax was due. Someone with £40,000 in savings and no US tax liability can face a five-figure FBAR penalty for each missed year.

Bittner v. United States: per report, not per account

Until 2023 the IRS took the view that the non-wilful FBAR penalty applied to each account left off each report. In Bittner v. United States, decided on 28 February 2023, the US Supreme Court held by five votes to four that it applies once per late or inaccurate report. Mr Bittner had 272 account entries across five years. The government sought $2.72 million. The Court held the maximum was $50,000, at the statutory $10,000 per report.

Bittner limits non-wilful penalties only. Wilful penalties are still calculated per account and can reach half the balance for each year. Six years of wilful penalties can exceed the money in the account, though the IRS manual tells examiners to apply mitigation limits in most cases.

Reasonable cause

Outside the programme, most of these penalties can be excused if you show reasonable cause. Reasonable cause is a higher bar than non-wilfulness. It requires that you exercised ordinary care and prudence, not merely that you did not know. That gap is the value of the Streamlined procedures: they waive penalties on the lower standard.

Time limits

The IRS has six years from the due date of an FBAR to assess a penalty for it. For an unfiled tax return there is no time limit at all, and an unfiled Form 8938, 5471 or 3520 keeps the related return open. Waiting does not make the older years safe. It only moves the six-year FBAR window forward while new years are added.

Criminal exposure

Wilful failure to file a return or an FBAR is a crime. Prosecutions of ordinary people living abroad with local accounts and fully taxed income are, in our experience, not something the IRS pursues. The realistic risk for that group is civil penalties. For someone who has hidden income, the position is different and needs a lawyer.

There are five other routes: filing late FBARs on their own, the Delinquent International Information Return Submission Procedures, the Voluntary Disclosure Practice for wilful cases, the Relief Procedures for Certain Former Citizens, and a so-called quiet disclosure. Which is right depends on three questions: was tax unpaid, was the failure wilful, and are you still a citizen.

Late FBARs on their own, and the withdrawn Delinquent FBAR Submission Procedures

For years the IRS published a short set of Delinquent FBAR Submission Procedures. They applied to people who had reported and paid tax on all their income but had not filed FBARs. The page stated that the IRS would not impose a penalty in that case, provided the IRS had not already made contact.

That page was removed from the IRS website at the start of July 2026, without an announcement. Nothing has replaced it. The IRS FBAR page now says that filing an FBAR late or not at all is a violation that may be subject to penalties, and tells people who are not under investigation to file late reports as soon as possible to keep penalties to a minimum.

What this means in practice:

• You can still file late FBARs. You use the same FinCEN system, pick a reason for late filing and add an explanation.
• There is no longer a published promise of no penalty. Penalties remain discretionary, and the IRS manual still allows an examiner to issue a warning letter instead of a penalty.
• The Streamlined pages were reviewed by the IRS in the same month and are unchanged.
• If your returns were correct and only FBARs were missed, late filing with a clear explanation is still the proportionate route. The risk is higher than it was, and the explanation matters more.

We expect practice to settle over the coming year. Our article on FBAR for Americans in the UK explains the filing itself.

Delinquent International Information Return Submission Procedures

These apply when your returns reported all your income but an information return was missed: Form 8938, 5471, 3520, 8621 and similar. The IRS describes them on its page for the Delinquent International Information Return Submission Procedures. You attach the missing forms to an amended return, except Forms 3520 and 3520-A, which are filed on their own.

These procedures do not waive penalties. You may attach a reasonable cause statement, but the IRS says penalties may be assessed without the statement being considered first, leaving you to argue the point afterwards. Where a missed form carries a $10,000 penalty and unreported income is involved, the Streamlined route is usually safer.

The Voluntary Disclosure Practice for wilful cases

The Voluntary Disclosure Practice is the IRS Criminal Investigation programme for people whose non-compliance was wilful and who want to resolve it without prosecution. The IRS describes it on its page for the Criminal Investigation Voluntary Disclosure Practice.

You apply on Form 14457 in two parts. Part I asks for preclearance, which confirms the IRS does not already have you under examination or hold information about you from a third party. Part II, due within 45 days of preclearance, is the full disclosure. If accepted, you file or amend six years of returns, pay tax, interest and penalties in full, and cooperate with a civil examiner.

The penalty terms are in transition. Under the framework used since 2018, the examiner applies a 75% civil fraud penalty to the year with the highest tax and a wilful FBAR penalty of 50% of the highest account balance. In December 2025 the IRS proposed replacing that with a simpler schedule, including a 20% accuracy penalty for each amended year and failure-to-file penalties for each unfiled year, and took comments until March 2026. Check which terms apply on the day you apply. A voluntary disclosure is made through a tax attorney.

Once you make a Streamlined submission you cannot later enter the Voluntary Disclosure Practice for the same matter, and the reverse is also true. The choice between them is made once.

Relief Procedures for Certain Former Citizens

These are for people who have already given up US citizenship and never filed. The IRS sets out the terms on its page for the Relief Procedures for Certain Former Citizens. You qualify if:

• you relinquished citizenship after 18 March 2010;
• you have no US filing history as a citizen or resident;
• your net worth was under $2 million both when you expatriated and when you submit;
• your total US tax for the year of expatriation and the five years before it is $25,000 or less;
• your failures were non-wilful.

You file six years of returns with all information forms, including Form 8854 for the final year. You do not need a Social Security number. If you qualify, the IRS does not collect the tax, interest or penalties. The IRS says the procedures have no set end date and that it will give notice before closing them. They do not help someone who is still a citizen, though they shape the decision about whether to renounce before or after catching up.

Quiet disclosure, and why it is risky

A quiet disclosure is filing late or amended returns through the normal channels without using any IRS programme, in the hope that nobody notices. People also call simply starting to file from this year onwards a quiet disclosure going forward.

The risks are specific:

• No penalty protection. Each late FBAR and information return is exposed to its own penalty.
• Late international forms attached to a return can trigger penalty notices generated by computer.
• Past years stay open with no time limit.
• Filing this year's FBAR with accounts opened years ago shows the IRS the gap.
• Choosing not to use an available programme after learning of the duty can itself look like a conscious decision.

The IRS does say that people who made quiet disclosures in the past may still use the Streamlined procedures, though penalties already assessed are not refunded. A late start made in the wrong way can usually still be put right.

An accidental American is a person who is a US citizen by birth or descent but has little or no lived connection with the United States, and often did not know citizenship carried a tax duty. If that is you, the same filing rules apply as for any citizen, the Streamlined Foreign Offshore Procedures were largely designed with you in mind, and your facts are usually the clearest case of non-wilful conduct there is.

How to know whether you are a US citizen

Born in the United States. If you were born on US soil you are a citizen, whatever your parents' nationality and however briefly you stayed. The only real exception is the child of an accredited foreign diplomat. Your UK passport shows your place of birth, which is why your bank asked.

Born outside the United States to a US parent. Citizenship by descent depends on the law in force when you were born, whether your parents were married, and how long your American parent had lived in the United States before your birth. The rules are in 8 USC 1401. In outline:

• Two citizen parents: you are a citizen if either had lived in the United States at any time.
• One citizen parent and one non-citizen parent, married, and you were born on or after 14 November 1986: you are a citizen if the American parent had been physically present in the United States for five years before your birth, two of them after the age of 14.
• The same, born before that date: ten years, five of them after 14.
• Unmarried parents: different rules apply depending on whether the mother or the father was the citizen.

If the conditions were met, you have been a citizen since birth, whether or not anyone registered the birth or applied for a passport. If they were not met, you are not a citizen and have no US filing duty on that account. Where it is unclear, an immigration lawyer can give a definite answer, and it is worth having one before you file tax returns on an assumption.

Citizenship does not lapse. Living abroad for decades, taking British nationality or letting a US passport expire does not end US citizenship. It ends only through a formal act at a US embassy or consulate, recorded in a Certificate of Loss of Nationality.

Green cards. A green card holder remains a US tax resident until the card is formally given up, usually by filing Form I-407, or is taken away. An expired card is not an abandoned one for tax purposes.

Getting a Social Security number as an adult abroad

You cannot make a Streamlined submission as a citizen without a Social Security number, so this comes first. Many accidental Americans were never issued one. You apply through the Federal Benefits Unit that serves your country, which for the UK is at the US Embassy in London. The Social Security Administration lists the units on its page for service outside the United States.

What to expect:

• You complete Form SS-5-FS, the application for people outside the United States.
• An applicant aged 12 or over who has never had a number must attend an interview in person.
• You need original documents proving your age, your identity and your US citizenship. A US passport or a Consular Report of Birth Abroad proves citizenship. If you have neither, you may need to obtain a US passport first.
• Adults are also asked for evidence that they have not previously been issued a number, such as records showing they have lived outside the United States since childhood.
• The card arrives by post some months later. Allow for this in your timetable.

While you wait, work on the returns can go ahead. Tell your bank that you have applied. The IRS has allowed financial institutions some latitude on missing US taxpayer numbers for older accounts, though each bank applies its own policy.

Catch up and stay, or catch up and renounce?

Some people decide they want no further tie to the US tax system. Renouncing is possible, but it does not remove the past. To leave cleanly you must certify on Form 8854 that you have complied with your US tax obligations for the five years before you expatriate. If you cannot, you are treated as a covered expatriate and face the exit tax rules, whatever your wealth.

So the usual order is: catch up first, then renounce, then file a final return with Form 8854. Three points to know:

• The Streamlined procedures cover three years of returns. The certification covers five. In practice the extra two years are prepared and filed as well.
• You are also a covered expatriate if your net worth is $2 million or more, or your average annual US income tax over the previous five years is above an indexed threshold, which the IRS gives as $206,000 for 2025 on its expatriation tax page. There is an exception from these two tests for some people who were dual citizens from birth, but the five-year certification still applies to them.
• The State Department fee for processing a Certificate of Loss of Nationality fell from $2,350 to $450 from 13 April 2026, as shown in the schedule of consular fees.

Renouncing is permanent and has consequences beyond tax, including the right to live and work in the United States. For someone with modest means who has already renounced without filing, the former citizen relief procedures above may apply instead. Our expatriation service covers the tax side of the decision.

If the IRS has opened a civil examination of any of your returns, you can no longer use the Streamlined procedures. Other IRS letters do not automatically close the door, and a letter from a bank never does. Your passport is at risk only if you owe a large assessed tax debt that you have not arranged to pay, which is unusual for someone who has simply not filed.

Sorting the letters

The test in the IRS rules is whether you are under civil examination or criminal investigation. It is not whether the IRS knows about you. The Voluntary Disclosure Practice is stricter: there, a disclosure is too late once the IRS has received information about your non-compliance from a third party.

If you are already under examination

You deal with the examiner. Penalties are then decided in the examination, where non-wilfulness and reasonable cause can still be argued and often succeed for people with ordinary facts. You do not send a Streamlined package, and you do not file late FBARs without first telling the examiner. Get representation before your first substantive reply.

If a letter arrives after you have submitted

The IRS computers sometimes issue automatic penalty notices on late returns or late information forms, even inside a Streamlined package. The answer is a written response that identifies the submission, encloses the Form 14653 and asks for the penalty to be removed under the Streamlined terms. Do not ignore it, and do not simply pay it.

Passport denial and revocation

Under section 7345 of the Internal Revenue Code, the IRS certifies people with seriously delinquent tax debt to the State Department, which then refuses to issue or renew a US passport and may revoke an existing one. A seriously delinquent tax debt is an assessed, legally enforceable federal tax debt above an indexed threshold, on which the IRS has filed a lien or issued a levy. The threshold is $66,000 for 2026, including penalties and interest, according to the IRS guidance on passports and seriously delinquent tax debt.

Three things keep this in proportion:

• It needs an assessed debt. Unfiled returns alone do not trigger it. A debt has to be assessed first, and the collection steps taken.
• Arrangements stop it. A debt being paid under an instalment agreement or an accepted offer in compromise is not counted. Nor is one the IRS has classed as currently not collectible.
• You are warned. The IRS sends notice CP508C when it certifies you, and reverses the certification when the debt is paid or brought under an arrangement.

FBAR penalties are not tax debts and do not count towards the threshold. For someone abroad whose passport is affected, the State Department may issue a limited passport valid only for direct return to the United States. In practice this is a concern for people who have been assessed and stopped engaging, not for people who are catching up.

Can the IRS collect from you in the UK?

The UK does not generally collect US income tax on behalf of the IRS from its own residents, and the tax treaty has no general collection article. The IRS can still act against US assets, US-source payments such as Social Security, and refunds. The practical pressure points are different: your UK bank's reporting, your passport, your ability to travel to and work in the United States, and inheritances from American relatives.

After you submit, the IRS processes the returns like any other returns. It does not acknowledge the submission, it does not send a closing letter, and it does not sign an agreement with you. For most people the outcome is silence, followed by ordinary annual filing.

Processing

The IRS states that returns filed under the Streamlined procedures are processed like any other return submitted to it, and that receipt will not be acknowledged. Paper returns for earlier years are entered by hand and take months. You may see signs of processing: a cashed payment, an account transcript that shows the returns, a refund, or a notice adjusting a figure. Many people see nothing for half a year or more. Your courier receipt and FinCEN confirmations are your evidence that you filed.

Is there a closing letter?

No. The IRS says in terms that the procedures do not end with a closing agreement. This is the main difference from the Voluntary Disclosure Practice, which ends with a signed agreement that settles the years covered. A Streamlined submission is accepted in the way any tax return is accepted: by not being challenged.

Can you be audited?

Yes. The returns are not automatically examined, but they can be selected under the normal audit selection processes, and the IRS may check the account information against what banks have reported. An examination can also test the certification.

If an examination finds more tax due, the IRS can charge penalties on the additional tax. The penalties waived by the programme stay waived unless the examination finds that your original non-compliance was fraudulent or that your FBAR failure was wilful. That is the scenario a careful, complete narrative is written to prevent.

How long are the years open?

Filing starts the clock that never started on an unfiled return. The IRS then generally has three years to assess more tax on that return. The period is six years if you left out more than a quarter of your gross income, or more than $5,000 of income from foreign financial assets. There is no limit where fraud is shown. Keep the full submission, your working papers and the bank statements behind every figure for at least six years.

Staying compliant afterwards

The IRS expects you to file on time through the normal channels from then on. Falling behind again after a Streamlined submission is hard to describe as non-wilful. Each year you file:

• Form 1040 by 15 June if you live abroad, with any tax paid by 15 April to avoid interest;
• the FBAR by 15 April, with the automatic extension to 15 October;
• Form 8938, Form 8621 and other information returns with the tax return where they apply.

It is also the moment to stop the problems recurring. That may mean moving ISA investments out of UK funds, reviewing how a pension is reported, or adjusting how the UK and US returns treat the same income. Our US federal return service and FBAR and FATCA service handle the annual filings, and our cross-border tax planning work deals with the structure.

Your UK position

Catching up with the IRS sometimes shows up a UK point as well: US-source dividends, a US rental property or a US pension that never went on a UK return. HMRC has its own disclosure routes for that. Preparing both countries' returns from one file is how these are found and fixed at the same time.

The mistakes that cause trouble fall into three groups: using the programme when you do not qualify, sending a package the IRS cannot process as Streamlined, and filing returns that are wrong. Almost all of them are avoidable with an ordered approach.

Eligibility mistakes

• Miscounting days. Counting nights instead of calendar days, or forgetting a transit day, and failing the 330-day test without realising.
• Ignoring a spouse. Filing jointly when only one spouse meets the non-residency test.
• Certifying non-wilfulness against the facts. The most serious error. It turns a penalty problem into a false statement problem.
• Submitting while under examination. The package gives no protection and hands the examiner a signed statement.
• Filing without a Social Security number. The returns may be processed, but without the Streamlined penalty terms.

Certification mistakes

• A narrative of two or three sentences.
• Wording copied from the internet or supplied as a template.
• Leaving out an unfavourable fact that the returns or bank records reveal.
• Not explaining where the money in the accounts came from.
• One shared statement for spouses whose reasons differ.
• Using an out-of-date version of Form 14653, or leaving the days-in-the-US section blank for a year you rely on.
• Signing the certification before the FBARs have been filed.

Packaging mistakes

• E-filing the returns, or posting them to the ordinary IRS address.
• Omitting the red "Streamlined Foreign Offshore" marking on a return or information form.
• Posting the three years in separate envelopes at different times.
• Not attaching a copy of Form 14653 to each return.
• Not selecting "Other" and naming the procedures on each FBAR.
• Sending the wrong years: counting three years back from today instead of from the last due date that has passed.
• Leaving payment out, or sending a payment the IRS cannot match to you.

Return mistakes

• Missing information forms. A package without the Forms 8621, 8938 or 5471 that the facts require is incomplete, and those forms are where the penalties sit.
• Treating ISAs as tax-free. They are not, for US purposes.
• Ignoring PFICs. UK funds reported as if they were ordinary shares.
• Figures that do not agree. FBAR balances, Form 8938 values and the interest on the return should reconcile with each other and with the bank's own reporting.
• Choosing the exclusion by default. Using the foreign earned income exclusion where the foreign tax credit would have given a better result for years to come.
• Wrong exchange rates. FBAR balances use the Treasury year-end rate. Income uses the average rate or the rate on the day.
• Leaving out an account. A dormant account, a child's account you sign on, a joint account with a non-American spouse, a company account.

Mistakes before and after

• Signing a W-8BEN to make the bank's letter go away.
• Filing this year's return and FBAR first "to get started", which is a quiet disclosure and undermines the later package.
• Waiting for certainty. The programme is available only until the IRS makes contact, and you do not control when that is.
• Not filing the following year. A one-off catch-up followed by silence invites exactly the questions you answered in the narrative.

From first conversation to posting the package usually takes six to ten weeks if you already have a Social Security number and your records are to hand. The main cause of delay is getting old statements from banks and pension providers. If you need a Social Security number first, add the months that takes.

A realistic timeline

If a filing deadline is close, the timetable is planned around it, because the passing of a deadline changes which years are in the package.

Document checklist

Identity and status

• US passport, or birth certificate, or Consular Report of Birth Abroad
• Social Security card or number; green card if relevant
• UK passport and National Insurance number
• Dates of every visit to the United States in the last three years, from passport stamps, airline bookings and calendars
• Any US returns ever filed, and any letters from the IRS
• The bank's FATCA letter and any form you returned

Income, for each of the three tax years

• P60s and P45s, and the final payslip of each UK tax year
• P11D benefits statements
• UK Self Assessment returns and tax calculations, if you file them
• Self-employment or partnership accounts
• Rental income and expenses
• Interest and dividend statements for every account, including ISAs
• Investment platform tax reports and transaction histories
• Pension contribution statements, and details of any withdrawals or lump sums
• Completion statements for any property bought or sold
• Details of gifts or inheritances received
• Share scheme records: grants, vesting, exercises and sales

US tax years are calendar years and UK tax years run from 6 April, so three US years need records from four UK tax years.

Accounts, for each of the six FBAR years

• A list of every account: bank, building society, ISA, premium bonds, investment platform, pension, and any account you can sign on
• The provider's name and address and the account number
• The highest balance in each calendar year. Year-end statements plus a scan for unusual peaks is usually enough
• Opening and closing dates for accounts that did not exist for the whole period

For the narrative

• A short timeline of your life: where you lived and worked, and when
• How and when you learned of the US filing duty
• The names of any accountants or advisers you used, and what they did
• Where the money in each account came from

If records are missing

UK banks will normally supply statements going back at least six years on request, sometimes for a fee. Closed accounts can be traced through the provider. Where a figure truly cannot be found, a reasonable estimate is used and disclosed as an estimate. An honest estimate is acceptable. A blank is not.

Getting started

Send a short note of your situation to hello@usuktaxexperts.com or use the contact page. We reply within one working day. Nothing is filed until the route has been agreed and you have approved every document.