Many Indian-Americans and NRIs living in the U.S. are unaware that failing to disclose Indian bank accounts, mutual funds, or property rental income can trigger steep IRS penalties. The IRS still allows certain taxpayers to come clean under its Streamlined Foreign Offshore Procedures, but time and eligibility are critical.
At Kewal Krishan & Co, we help taxpayers avoid criminal liability and penalties by guiding them through offshore voluntary disclosures, including Indian income that was not previously reported.
Let’s walk through what the Amnesty (Streamlined) Program is, who qualifies, and how you can use it in 2025.
What Is the IRS Amnesty Program?
The Streamlined Filing Compliance Procedures were introduced in 2014 as a “second chance” for non-willful taxpayers to fix foreign income omissions.
There are two main versions:
- Streamlined Foreign Offshore Procedures (SFOP) – for taxpayers living outside the U.S.
- Streamlined Domestic Offshore Procedures (SDOP) – for U.S. residents
If eligible, you can file 3 years of amended tax returns (Form 1040X), 6 years of FBARs (FinCEN Form 114), and avoid criminal prosecution and large penalties.
Tax Code & Form References
- IRC §6038D – Reporting of specified foreign financial assets
- IRC §6662 – Accuracy-related penalty
- Form 1040X – Amended U.S. Individual Income Tax Return
- Form 8938 – Statement of Specified Foreign Financial Assets
- FinCEN Form 114 (FBAR) – Report of Foreign Bank and Financial Accounts
- Form 14654 – Certification for SDOP
- Form 14653 – Certification for SFOP
Are You Eligible?
To use the Streamlined Program in 2025, you must:
- Have failed to report foreign income (e.g., from Indian FDs, mutual funds, rental income)
- Have not filed FBAR/Form 8938 correctly
- Certify that your failure was non-willful
- Be not currently under IRS audit or criminal investigation
Note: Non-willfulness means you didn’t know you were supposed to report it or misunderstood the law-not that you were negligent or intentionally hiding.
Example: Using Streamlined to Fix Indian FD Income
Priya moved to the U.S. in 2019 on an H-1B visa. She forgot to report ₹12 lakh (approx. $14,400) in interest from Indian fixed deposits from 2020 to 2022.
By 2023, she’s worried about IRS penalties and wants to come clean. Her options:
- File under SDOP: She amends 2020-2022 returns via Form 1040X, files 6 years of FBARs, and submits Form 14654.
- Pay a 5% penalty on the highest aggregate foreign asset balance (say $60,000), i.e., $3,000
- Avoids criminal charges and massive penalties under IRC §5321(a)(5) (which could be $10,000+ per FBAR violation)
Step-by-Step Guide for 2025
Step 1: Determine Eligibility
Ensure you’re non-willful and not under audit.
Step 2: Gather Foreign Income Records
Collect Indian bank statements, mutual fund NAVs, real estate rent ledgers, etc., for last 3 years.
Step 3: Amend 3 Years of Tax Returns
Use Form 1040X to include omitted income and Form 8938 if required.
Step 4: File 6 Years of FBARs
Electronically file FinCEN Form 114 via BSA e-filing portal.
Step 5: Sign Certification
Submit Form 14654 or 14653 attesting non-willful conduct and detailed explanation.
Step 6: Pay Taxes + 5% Penalty (SDOP Only)
Pay additional taxes, interest, and 5% penalty if resident.
Step 7: Retain Documentation
Keep proofs of filing, asset values, certifications, and corrected records for at least 6 years.
Conclusion
Yes, the IRS Streamlined Amnesty Program is still available in 2025-but only if you act before the IRS contacts you. If you’ve failed to report Indian income, now is the time to fix it the right way-before penalties multiply or criminal enforcement starts.
Call to Action
Anshul Goyal, CPA EA FCA, is a U.S.-licensed Certified Public Accountant and Enrolled Agent admitted to practice before the IRS. He specializes in cross-border tax compliance for Indian-Americans and U.S. businesses with foreign assets. If you’ve missed reporting Indian income or accounts, consult us immediately for a confidential review.
About Our CPA
Anshul Goyal is a Certified Public Accountant (CPA), Enrolled Agent (EA), and Fellow Chartered Accountant (FCA). He represents clients in IRS matters, specializes in foreign income reporting, and assists NRIs with streamlined compliance for U.S.-India tax complexities.
Disclaimer
This blog is for informational purposes only and does not constitute legal or tax advice. Always consult a qualified CPA before filing under any IRS program. Past compliance actions do not guarantee future eligibility.
FAQs
1. Is the Streamlined Program still open in 2025?
Yes, it remains open, but eligibility depends on your circumstances and audit status.
2. Can I file if I already received an IRS notice?
If you’re already under audit, the program is not available. Other disclosure methods may apply.
3. Do I have to pay the 5% penalty?
Only U.S. residents filing under SDOP are subject to the 5% penalty. Non-residents (SFOP) may not owe any penalty.
4. What if I don’t have complete records from India?
You should reconstruct to the best of your ability and explain assumptions in the certification.
5. Is mutual fund income in India covered under this?
Yes. PFIC income, interest, and capital gains must all be reported accurately.