IRS Is Closing Offshore Voluntary Disclosure Program; Deadline of September 28, 2018

The IRS announced it will be closing its Offshore Voluntary Disclosure Program (OVDP) as of September 28, 2018. The news follows a significant decrease in taxpayer participation in the program, coupled with advances in third-party reporting of offshore account information and increased awareness of reporting obligations. All submissions made by the deadline must be complete – partial or “placeholder” submissions will not be accepted.

OVDP is the process though which taxpayers who previously failed to report foreign financial assets to the IRS come forward voluntarily and pay all tax due on those foreign assets. It is usually used by taxpayer’s whose failure to report was willful and intentional. OVDP was specifically designed to:

  • Protect taxpayers from criminal liability, and
  • Provide terms for resolving civil tax and penalty obligations.

Despite the IRS decision to close OVDP, offshore tax and FBAR (Report of Foreign Bank  and Financial Accounts) compliance will continue to remain top priorities of the Service. The IRS has expanded its ability to obtain foreign account information under the Foreign Account Tax and Compliance Act (FATCA). The IRS also has other resources to obtain offshore information, such as intergovernmental agreements and John Doe Summonses. The IRS focus on combatting U.S. tax evasion does not end with cessation of OVDP.

Streamlined Filing and Other Options Are Still Available

For taxpayers whose failure to report foreign accounts was non-willful and unintentional, the Streamlined Filing Compliance Procedures are still available. Under the Streamlined Procedures, taxpayers, who were unaware of their obligations to file FBARs and report foreign income, may come forward voluntarily. Taxpayers residing within the United States benefit from a reduced penalty structure; taxpayers residing outside the United States may avoid penalties altogether. Other voluntary disclosure programs for foreign accounts and assets, such as the Delinquent FBAR Procedures and the Delinquent International Information Return Submission Procedures, also continue to be available.

If you have foreign financial accounts and were not aware of your U.S. tax and FBAR reporting obligations, you are not alone. Since the Streamlined Filing Procedures were introduced in 2014, 65,000 taxpayers have used the program to come into compliance. Filing under Streamlined procedures reduces a taxpayer’s exposure to an IRS audit and penalties for non-compliance. These penalties may be substantial even if non-compliance was unintentional.

IRS Resources

If you need assistance with representation before the IRS on these or other complex tax compliance issues, the tax attorneys at M. Robinson & Company may be able to help. Please feel free to contact us at 617-428-6900 with questions.

The materials in this publication does not constitute legal advice. It is intended for general information purposes only.

End of Article

 

Post a Comment

Your email is kept private. Required fields are marked *