Do you have undisclosed foreign assets? If so, you’ll need to learn more about the IRS’ decision to terminate its Offshore Voluntary Disclosure Program (OVDP), effective September 28, 2018. Attorney David Foate of Gresham|Savage outlined the eliminated OVDP and shared other available programs that can assist U.S. taxpayers who run afoul of their reporting obligations:
Since the OVDP’s launch in 2009, more than 56,000 taxpayers have used the OVDP to resolve failures to properly report their foreign (i.e. overseas or offshore) assets. Without OVDP, penalties for failures to properly report foreign financial assets can be as high as 100% of the value of the foreign account or asset, and can also result in criminal prosecution. The reduced penalties offered under the OVDP created an incentive for U.S. taxpayers to voluntarily disclose their foreign assets. Over the last 8 years, U.S. taxpayers participating in the OVDP have voluntarily paid $11.1 Billion in back-taxes, interest and penalties.
The IRS announcement to shutter the OVDP before year’s end came as no surprise. The IRS has always indicated that the OVDP was temporary and the IRS began hinting in November 2017 that the termination was forthcoming. The number of disclosures has steadily declined each year since 2011, falling to only 600 disclosures in 2017. The IRS indicated that the continued decrease in the number of disclosures suggests: (i) an increased awareness among U.S. taxpayers of their offshore tax and reporting obligations, and (ii) advances in third-party reporting.
Although OVDP is scheduled to be closed this year, other programs will remain available to assist taxpayers:
- IRS-Criminal Investigation Voluntary Disclosure Program;
- Streamlined Filing Compliance Procedures for taxpayers who were “unaware” of their reporting and filing obligations;
- Delinquent FBAR submission procedures; and
- Delinquent international information return submission procedures.
This information is for educational purposes only and is not intended to provide legal counsel or serve as legal advice. If you have a legal matter, it is best to consult the advice of an attorney. You can get referred to an attorney for a free 30-minute consultation through the San Diego County Bar’s Lawyer Referral & Information Service at www.sdcba.org/ineedalawyer or by calling 1 (800) 464-1529.