The Offshore Voluntary Disclosure Program ends Sept. 28, the IRS announced this month.
OVDP is a voluntary disclosure program specifically designed for taxpayers with exposure to potential criminal liability and/or substantial civil penalties due to a willful failure to report foreign financial assets and pay all tax due in respect of those assets. OVDP is an option that offers protection from criminal liability and terms for resolving civil tax and penalty obligations.
The IRS has warned for several years it would be ending the Offshore Voluntary Disclosure Program.
The OVDP requires the taxpayer to pay all back taxes, interest and penalties for all the years in the disclosure period. In addition, the IRS also imposes an OVDP penalty that is generally 27.5% of the highest aggregate value of unreported OVDP assets for the years at issue (50% if it is public information that the foreign financial institution with the taxpayer’s assets is under investigation or is cooperating with the IRS or Department of Justice.)
The OVDP program is not available to taxpayers if the IRS has already initiated a civil examination or criminal investigation of the taxpayer. Please contact us before September if you’re considering applying for the Offshore Voluntary Disclosure Program.
There also are several other options for U.S. taxpayers with undisclosed offshore accounts. Each program offers advantages and disadvantages.
You can read details about your various options in this previous article: Relief From Foreign Bank Account and Foreign Information Reporting Failures
The IRS also warned last week it may end another of the options, the Streamlined Filing Compliance Procedures. These options are available to taxpayers certifying that their failure to report foreign financial assets and pay all tax due in respect of those assets did not result from willful conduct on their part.
You can read more about the qualifications and benefits of the Streamlined Filing Compliance Procedures here. Until announced otherwise, they remain an option for individual taxpayers with undisclosed offshore accounts.
There is no “one size fits all” solution to a taxpayer caught up with undeclared foreign assets or unfiled foreign information returns. We strongly advise those needing assistance contact us before trying to undertake any of these options to ensure compliance.