The Offshore Voluntary Disclosure Program or, OVDP, essentially is designed to allow taxpayers to come clean with the certainty that they will not face criminal prosecution for not previously disclosing their overseas accounts. Taxpayers have the added benefit of receiving a fixed penalty structure for settlement of past non-compliance.
In exchange for their voluntary compliance and information exchange, taxpayers will be assessed a miscellaneous penalty in lieu of all other penalties that may apply to their undisclosed foreign assets and entities, such as FBAR and offshore-related information return penalties and tax liabilities. Generally speaking, the miscellaneous penalty is equal to 27.5% of the highest aggregate balance in all foreign bank accounts (or foreign assets) during the period covered by the voluntary disclosure. Additional penalties on the taxpayer’s unreported income during the disclosure period may also apply, as well as penalties for failure to file a tax return or pay tax due, if applicable.
Since the initial launch, more than 56K taxpayers have used one of the programs to comply voluntarily. However, the IRS has announced that it will begin the process to close the program September 28th, 2018. Additionally, the IRS is urging taxpayers with undisclosed foreign money to come forward before their opportunity window ends. They plan on continue using other tools to combat offshore tax avoidance such as taxpayer education, whistleblower leads, civil examination, and criminal prosecution.
Although there is a loss of protection through the termination of the program, the IRS takes into consideration that the circumstances of taxpayers with foreign assets vary widely and will continue to offer the following options to address the failure to comply with tax return obligations:
- – IRS Criminal Investigation Voluntary Disclosure Program;
- – Streamlined Filing Compliance Procedures;
- – Delinquent FBAR submission procedures; and
- – Delinquent international information return submission procedures.
Here at EPGD Law, we understand that handling various facets of the IRS can be frustrating and confusing. Our dedicated attorneys are ready to answer your questions and help alleviate some of the stress associated with issues regarding the IRS. Call us (786) 837-6787 or email us firstname.lastname@example.org to schedule a consultation and discuss your options.
*Disclaimer: This blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns. Contacting us through our website does not establish an attorney-client relationship.*