The IRS provides specific procedures for taxpayers to file overdue international information returns, such as Forms 3520, 3520-A, 5471, 8938, and more, through the Delinquent International Information Return Submission Procedures (DIIRSP). This procedure allows taxpayers to submit late information returns, but penalties may still be assessed in accordance with existing procedures, even if a reasonable cause statement is attached. The key requirements are that taxpayers are not under IRS examination or investigation, have not been contacted by the IRS about the delinquent returns, and attach a reasonable cause statement to each late return.

In late 2024, the IRS reiterated its guidance on how to file overdue international information returns, emphasizing that penalties may still be assessed.

If in addition to failure to file international information returns, you have associated unreported foreign income, you should consider possible alternative remediation options, such as the Streamlined FIling Compliance Procedures or Voluntary Disclosure Practice.

What You Need to Know About DIIRSP

Before filing, it’s critical to understand the statutory penalties and determine the proper compliance procedure for your situation. Your specific facts should be evaluated to determine whether an alternate path to remediation, such as the Streamlined Filing Compliance Procedures (either SDOP or SFOP), Voluntary Disclosure Practice, or other option, may be better suited under the circumstances.
Penalties for unfiled forms like 3520, 3520-A, 8938, 5471, or 5472 can be significant, which further emphasizes the importance of properly evaluating the proper route to compliance, especially considering the IRS statement that “penalties may be assessed without considering the attached reasonable cause statement.”
If you’ve already been contacted by the IRS, DIIRSP may not apply — though other options may still be available depending on your facts and circumstances.
Professional guidance can prevent costly mistakes that occur when taxpayers file reactively without a clear strategy.

What Are The Delinquent International Information Return Submission Procedures?

The Delinquent International Information Return Submission Procedures allow taxpayers to file overdue international information returns, but penalties may still be assessed, even if a reasonable cause statement is provided. Taxpayers must meet specific eligibility requirements to use this process.

This procedure addresses a common problem: many taxpayers with international financial interests discover they should have filed certain information returns years after the deadlines passed. Without this relief program, penalties can accumulate rapidly—in circumstances where a Form 3520 was required to report a gift or inheritance from a foreign person in excess of the filing threshold, penalties alone can reach 25 percent of the foreign gift or inheritance for each unfiled Form 3520.

Understanding International Information Return Requirements

The U.S. tax system requires extensive reporting of international financial activities, even when no additional tax is owed. These reporting requirements catch many taxpayers off guard, particularly those who receive foreign gifts or inheritances, have interests in foreign trusts, own foreign bank accounts, or own shares in foreign corporations.

Form 3520 reports transactions with foreign trusts and receipt of foreign gifts or inheritances exceeding $100,000 from foreign persons. Form 3520-A requires foreign trusts with U.S. beneficiaries to file annual information returns. Form 5471 applies to U.S. persons with interests in foreign corporations. Form 8938 (Statement of Specified Foreign Financial Assets) captures broader foreign financial asset reporting under FATCA. Form 3520 penalties vary depending on the nature of the filing requirement, but can be significant. Form 5471 penalties reach $10,000 per form, with additional penalties of $10,000 for each 30-day period of continued non-filing after IRS notice, up to a maximum of $50,000 per return. Form 5472 penalties have also been increased to $25,000 for failure to file.

IMPORTANT! Before You File

Many taxpayers rush to file overdue forms without understanding the penalties and procedures available, which can make their situation worse. The IRS may assess significant penalties if the filing is either not accompanied by a strong reasonable cause statement or if the taxpayer does not qualify for DIIRSP. Evaluating all compliance options — such as Streamlined Filing or Voluntary Disclosure — is crucial before submitting any late returns.

Eligibility Requirements For DIIRSP

Not be under IRS examination or investigation.
Not have been contacted by the IRS about the delinquent returns.
Attach a reasonable cause statement to each delinquent return explaining why the return is being filed late.

If you fail to meet these requirements, or if you have unreported income in addition to the failure to report international information returns, consider the Streamlined Filing Compliance Procedures or Voluntary Disclosure Practice instead.

Some Forms Covered Under DIIRSP

Form 3520: Foreign trust transactions and foreign gifts.
Form 3520-A: Annual information returns filed by foreign trusts for U.S. beneficiaries.
Form 5471: U.S. persons with various levels of foreign corporation ownership and control.
Form 8938: Specified foreign financial assets reporting when thresholds are exceeded.
Form 5472: Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business

Alternative Compliance Options

Streamlined Filing Compliance Procedures: Provides penalty relief for non-willful failures related to delinquent international information reports accompanied by unreported foreign income.
Streamlined Domestic Offshore Procedures: Requires the filing of amended returns for the past three years and FBARs for the past six years, with a 5% miscellaneous offshore penalty.
Streamlined Foreign Offshore Procedures: Similar to domestic procedures, no penalty for qualifying taxpayers living outside the U.S.
Voluntary Disclosure Practice: Higher penalties but mitigates the chances of criminal prosecution for complete and truthful disclosures.

Strategic Considerations And Professional Guidance

Selecting the right compliance approach requires careful analysis. The IRS’s willfulness determination can affect procedure eligibility. Courts have defined willfulness to include willful blindness and reckless conduct. A thorough evaluation plays a key role in successful submissions. Professional guidance from an international tax attorney often proves valuable in ensuring you choose the most appropriate compliance path and meet all requirements correctly.

Implementation And Filing Process

When using DIIRSP:

Prepare each delinquent return carefully and completely, including all required schedules and attachments.
Attach a reasonable cause statement to each delinquent return explaining why the return is being filed late.
Submit returns to the appropriate IRS service center based on current filing instructions.
Keep detailed records of submissions, including certified mail receipts or proof of delivery.
Monitor IRS processing and respond promptly to any correspondence.

Professional assistance from an international tax lawyer can help you navigate these complex procedures and improve your chances of resolving your international information reporting non-compliance more favorably.

Facing a Tax Problem? We’re Here to Help.

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