DIIRSP: The IRS Procedure for Late International Information Returns

If your income tax returns were filed on time and the only thing missing is a form, one for your Canadian corporation, your TFSA, your Canadian partnership, DIIRSP is usually the right door. It’s a narrower, quieter route than streamlined, built for exactly this gap: the tax was right, the information return wasn’t there. The IRS calls it the Delinquent International Information Return Submission Procedures, and it sits next to streamlined on the IRS’s own list of options for taxpayers with undisclosed foreign assets, not underneath it.

The confusion between the two is constant, and understandable. Both live on the same IRS page, both involve reasonable cause, and both exist because the IRS would rather have the form late than never. But they’re built for different gaps. Streamlined exists because your income tax picture had a problem: unreported foreign income, an unfiled return, an FBAR that never went in. DIIRSP exists because your income tax picture was fine and a separate reporting form, one that doesn’t measure income at all, got missed. Picking the wrong one wastes work at best; at worst it means certifying non-willfulness on a streamlined package for a return that never needed the certification, or filing a bare form under DIIRSP when the return underneath it was never right to begin with.

What is DIIRSP?

DIIRSP is a standalone catch-up path for one specific problem: an income tax return that was filed correctly and on time, missing one or more of the forms the IRS uses to track foreign corporations, trusts, partnerships, and accounts. It is not an amnesty and it makes no penalty guarantee. What it offers is a normal filing channel, with a reasonable cause statement attached to each late form, instead of waiting for the IRS to find the gap first.

The forms it covers are the ones that report ownership or activity abroad rather than income itself: Form 5471 for a foreign corporation, Form 5472 for a US corporation with foreign ownership, Form 3520 and 3520-A for foreign trusts (including a TFSA or RESP the IRS treats as one), Form 8865 for a foreign partnership, Form 8938 under FATCA, Form 926 for a transfer of property to a foreign corporation, and Form 8621 for a PFIC. Each carries its own filing trigger and its own penalty exposure, and DIIRSP treats them the same way procedurally: attach the form, attach the statement, file it.

DIIRSP is not new, and it’s not a temporary window the way some past disclosure programs were. It sits alongside streamlined and the domestic version as one of a small set of standing options the IRS publishes for taxpayers who come forward on their own, and unlike the old offshore voluntary disclosure programs it has no closing date, no acceptance letter, and no application to submit before you can use it. You use it by filing.

Who is eligible to use DIIRSP?

Three conditions, all required. Your income tax returns for the relevant years were filed on time, or under a valid extension. You have reasonable cause for not filing the specific information return on time. And you are not currently under IRS examination or criminal investigation for the years involved. The IRS has not yet contacted you about the missing forms; once it has, the door closes and whatever the IRS does next is on its terms, not DIIRSP’s.

Eligibility fails in one direction people miss constantly: if the income tax return itself was late, or understated income tied to the same foreign asset, DIIRSP alone is not enough. Filing a clean Form 5471 attached to a return that was three years late doesn’t fix the return being late. That combination needs streamlined filing compliance procedures (foreign residence) or the domestic version (US residence), which sweep in the missing information returns along with the income tax and FBAR side in one certified package.

Situation	Fits DIIRSP	Needs something else
Return filed on time, Form 5471 never attached	Yes
Return filed on time, income fully reported, TFSA never reported on 3520/3520-A	Yes
Return itself was never filed for the year		Streamlined, or a delinquent-return filing outside any program
Return filed on time, but foreign income was also left off		Streamlined (non-willful)
Already under IRS civil examination for the year		Whatever track the exam puts you on
IRS already sent a notice about the missing form		Respond to the notice; DIIRSP no longer applies

Two things trip people up on the examination condition. First, it’s specific to the year and, generally, the issue: an audit of an unrelated year or an unrelated item doesn’t necessarily block DIIRSP for a different year’s missing form, though it’s worth confirming before you file rather than after. Second, “contacted about the delinquent returns” means the IRS reaching out about the specific missing forms, not any IRS letter you’ve ever received. A routine notice about something unrelated doesn’t shut the door; a letter asking where your 5471 is does.

How do you file under DIIRSP?

Attach the delinquent international information returns to your original filing, following the instructions for that specific form, then write “Filed pursuant to Delinquent International Information Return Submission Procedures” at the top of each one. Attach a reasonable cause statement to each form you’re filing late; for Form 3520 and 3520-A specifically, the current instructions also want “Reasonable Cause Statement attached” noted on the form’s first page.

There’s no special mailing address and no separate cover letter. Most of these forms go in through the ordinary channel, an amended return if the original 1040 has already been processed, or attached to the current year’s return if you’re catching up going forward. Forms 3520 and 3520-A follow their own form-specific filing instructions rather than riding along with a 1040 at all. What DIIRSP does not have, and this is the detail people expect by analogy to streamlined, is a Form 14653 or 14654 equivalent. There’s no certification of non-willfulness to sign, no summary of your facts on a standard IRS form. The reasonable cause statement you write for each form is the whole submission; there’s no second document restating the story.

In practice the filing breaks into a few steps. Work out which years and which forms are actually missing first; a partial catch-up, this year’s form filed while last year’s sits open, doesn’t close the older year’s exposure and can look worse than filing nothing, since it shows you knew the form existed. Pull together the underlying records for each year, corporate financials for a 5471, trust statements for a 3520-A, account values for an 8938, since the reasonable cause statement is only as strong as what backs it. Draft a separate reasonable cause statement for each form and year rather than one narrative covering everything; a shared fact pattern, the same preparer, the same TFSA, can repeat across years, but the IRS reviews these form by form. File everything for all open years together, attach the required “filed pursuant to” language to each form, and keep proof of mailing or e-file confirmation, since there’s no IRS acknowledgment coming back to confirm receipt.

What penalties does DIIRSP avoid?

None automatically. What DIIRSP does is give you a channel to make the reasonable cause argument before a penalty notice arrives, rather than after. If the IRS accepts the reasonable cause statement, no penalty is assessed on that form for that year. If it doesn’t, or hasn’t reviewed it yet, the underlying penalty exposure is real and, on the IRS’s own description of the program, penalties “may be assessed in accordance with existing procedures” even while your statement is under review.

The exposure without reasonable cause is not small, and it varies by form rather than being one flat number.

Form	Base penalty	Statute
5471 (Categories 4, 5)	$10,000 per year, per corporation; up to $50,000 more if the failure continues 90 days past IRS notice; a 10% cut to foreign tax credits available	IRC 6038(b)
5471 (Categories 2, 3)	$10,000, unless reasonable cause is shown	IRC 6679
5472	$25,000 per related-party return, per year, larger than 5471’s base penalty	IRC 6038A(d)
8865	$10,000 per year, similar continuation and foreign-tax-credit exposure to 5471	IRC 6038(b)
3520 (transfers to or distributions from a foreign trust)	The greater of $10,000 or 35% of the value transferred or distributed	IRC 6677(a), (b)
3520-A (US owner reporting failure)	The greater of $10,000 or 5% of the trust assets treated as owned by the US person	IRC 6677(c)
926	10% of the fair market value of the property transferred, capped at $100,000 unless the failure was intentional disregard	IRC 6038B
8938	$10,000, plus $10,000 for each 30-day period after a 90-day IRS notice period, capped at $50,000 additional ($60,000 total)	IRC 6038D

Form 8621 sits apart from this table. There’s no standalone dollar penalty tied to a late PFIC return the way there is for the others; the cost is a lost or delayed QEF or mark-to-market election and, like every form on this list, an open statute of limitations under IRC 6501(c)(8) until it’s filed. That open-statute exposure runs underneath every form in the table too: a missing information return keeps the related tax year open to IRS assessment past the normal three years, narrowed to the related items only where reasonable cause and no willful neglect is established.

The “greater of $10,000 or a percentage” language on the 3520 and 3520-A rows deserves a second look, because it cuts both ways. For a modest TFSA or RESP, the percentage figure is often lower than $10,000, which means the flat $10,000 floor is what actually applies regardless of how small the account is. For a larger trust or a sizable one-time transfer, the percentage can run well past $10,000, which is why the exposure on a foreign trust with real assets in it is not comparable to a routine 5471 miss. A separate penalty under IRC 6039F, 5% of the gift per month late, capped at 25%, applies specifically to unreported gifts or bequests from a foreign person rather than transfers to or from a trust you’re treated as owning; it’s a different provision from 6677 even though both land on Form 3520.

What counts as reasonable cause under DIIRSP?

Reasonable cause under section 6038 and its companion penalty statutes asks a narrower question than streamlined’s non-willfulness certification: why wasn’t this specific form filed. A US preparer who never asked whether you owned a foreign corporation. Genuinely not knowing the account or entity triggered a filing requirement, a TFSA that looks like an ordinary savings account until someone tells you the IRS sees a foreign trust. Relying on professional advice that turned out to be wrong, documented rather than asserted after the fact.

The regulations under section 6038 want “an affirmative showing of all facts alleged as reasonable cause,” which means the statement has to carry the actual story, dates, who you asked, what you were told, not a template paragraph. A statement that just says “I didn’t know” without saying why you had no reason to know rarely moves the needle. The standard tracks IRC 6038’s own language, reasonable cause and not willful neglect, and it’s judged form by form and year by year rather than as one blanket claim across everything you’re catching up on.

The factors that tend to carry weight, drawn from how the IRS evaluates reasonable cause generally, include the complexity of the reporting question itself (a TFSA or RESP has no US equivalent and its trust treatment isn’t obvious from the account name), genuine and documented reliance on a paid preparer who had the facts needed to spot the issue and didn’t raise it, ongoing efforts to stay compliant elsewhere (a taxpayer who filed every other form correctly reads differently than one with a pattern of gaps), and how quickly the taxpayer corrected course once the requirement came to light. What tends not to carry weight: reliance on a preparer who was never told the foreign entity or account existed, since the preparer can’t flag what they don’t know about, and a bare claim of unfamiliarity with US tax law generally, since the standard asks about this specific filing requirement, not tax law at large.

Is DIIRSP the same as streamlined filing compliance?

No, and the difference is what each one is fixing. DIIRSP fixes a gap in the information returns attached to income tax returns that were otherwise fine. Streamlined fixes income tax returns and FBARs that were late or wrong, for a reason that wasn’t willful, and it happens to sweep the missing information returns in along the way. If your 1040s are clean and only a 5471 or 3520 is missing, DIIRSP is simpler: no certification form, no non-willfulness statement covering three years of returns, no six years of FBARs to reconstruct if the accounts were already reported correctly elsewhere.

	DIIRSP	Streamlined
Fixes	Missing information returns only	Late or understated income tax returns, FBARs, and information returns together
Certification	None; a reasonable cause statement per form	Form 14653 (foreign) or 14654 (domestic), a signed non-willfulness certification
Income tax returns required	Not part of the filing, unless amending to attach a form	Three years of amended or delinquent returns
FBARs required	Not part of the filing	Six years
Domestic version carries a penalty	No	Yes, 5% miscellaneous offshore penalty under 14654
Closes once IRS examination starts	Yes	Yes

You can combine DIIRSP with a parallel FBAR fix if the account behind the missing information return was also missing from your FBARs but the income tax return itself stayed clean; that runs through the delinquent FBAR submission procedures alongside DIIRSP rather than through streamlined. Where FBARs, information returns, and income tax all tangle together, the FBAR penalty decision tree walks through which combination applies.

What happens after you file under DIIRSP?

The IRS processes the return like any other filing; there’s no acknowledgment letter confirming your reasonable cause was accepted, and silence isn’t a yes. If reasonable cause is accepted, no penalty gets assessed on that form for that year, and nothing further happens. If the IRS disagrees, or assesses first and reviews the statement second, which the program’s own description allows for, you get a penalty notice. From there the options are a penalty abatement request built on the same reasonable cause facts, or a formal protest if the first request is denied.

That’s the same fight whether the assessment came through DIIRSP or found you first. The mechanics for pushing back on a 5471 or 5472 penalty, including what happens if it ends up in Tax Court, are in the 5471/5472 penalty abatement guide. Form 3520 penalties have their own abatement path and a recent shift in how the IRS treats first-time TFSA and RESP cases, covered in the 3520 penalty abatement guide and, for a TFSA specifically, this walkthrough of fighting an assessed 3520 penalty.

Timing is worth setting expectations on. Processing an amended return with an attached information return can run months rather than weeks, and a penalty notice, if one comes, doesn’t always arrive on a predictable schedule either. Filing under DIIRSP doesn’t pause that clock or accelerate it; what it does is put your reasonable cause statement on file the moment the form goes in, rather than only after a notice forces the conversation. If a notice does arrive, the response window on it is real and short, so having the reasonable cause facts already organized from the original filing saves time you won’t have to spare once a deadline is running.

Forms commonly filed through DIIRSP

A short list of what actually shows up in a DIIRSP filing, in order of how often it happens for a US person with Canadian ties.

Form	Typical trigger
Form 5471	Owning or controlling a Canadian corporation as a US person; see do you need to file it
Form 3520 / 3520-A	A TFSA, RESP, or other account the IRS treats as a foreign trust
Form 8865	Holding an interest in a Canadian partnership
Form 926	Transferring property, cash included, to a foreign corporation you own
Form 8938	Foreign financial assets over the FATCA reporting threshold
Form 8621	Holding a Canadian mutual fund or ETF that’s a PFIC

Form 5471 shows up most because it’s the one people expect least: a Canadian professional corporation set up years before a move south, still owned outright, with nobody along the way asking whether becoming a US person put a US filing duty on a foreign company that never touched US soil. Form 3520 and 3520-A follow close behind, almost always tied to an account opened in Canada for entirely Canadian reasons, a TFSA for tax-free savings, an RESP for a child’s education, that the IRS treats as a foreign trust regardless of how ordinary it looks on the Canadian side. Form 8865 catches a smaller group, usually someone with a stake in a Canadian professional or investment partnership. Form 926 is rarer still and tends to surface around incorporating a Canadian business or moving personal property into a corporate structure after becoming a US person. Form 8938 and Form 8621 are usually caught alongside one of the others rather than standing alone, since a missed 5471 or 3520 often means the underlying account or entity was never on the FATCA or PFIC radar either.

What should I do next?

Confirm the gap is actually the narrow kind DIIRSP fixes: income tax returns filed on time, only the information return missing, and no IRS contact yet on the years involved. If any of that isn’t true, streamlined is the fix, not DIIRSP. Then write the reasonable cause statement around the real, specific facts of why that form didn’t get filed, not a template. A few places to check before you file:

• Streamlined foreign offshore procedures, if your income tax returns weren’t fully accurate too
• Streamlined domestic offshore procedures, if you’re a US resident with the same combined problem
• Do you actually owe Form 5471 for a Canadian corporation, before assuming DIIRSP is even needed
• The FBAR penalty decision tree, if FBARs are tangled in with the missing form
• Fighting an assessed Form 3520 penalty, if the IRS already moved before you filed

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.