IRS has issued a reminder to taxpayers they have until Sept. 28 to apply for the Offshore Voluntary Disclosure Program (OVDP)
On Mar. 26, 2009, IRS announced its first OVDP, a form of a tax amnesty program. It permitted U.S. taxpayers with unreported foreign accounts to avoid criminal charges and pay reduced civil penalties by making a voluntary disclosure to IRS. The first OVDP ran through Oct. 15, 2009.
Thereafter, on Feb. 8, 2011, IRS announced a second OVDP. The second OVDP closed on Sept. 9, 2011.
On Jan. 9, 2012, IRS reopened the OVDP, which was modified in 2014 and remains in effect today. Unlike the previous OVDPs, the current OVDP does not impose a deadline by which taxpayers must make a voluntary disclosure to be eligible for avoiding criminal prosecution and pay reduced penalties—however, IRS indicated that it could terminate the program at any time.
According to IR 2018-176, since the OVDP's initial launch in 2009, more than 56,000 taxpayers have used one of the programs to comply voluntarily, paying a total of $11.1 billion in back taxes, interest, and penalties.
Sept. 28 closure. IRS has reminded taxpayers that it will close the current OVDP program on Sept. 28, 2018.
IRS noted that the number of taxpayer disclosures under the OVDP peaked in 2011, when about 18,000 people came forward. The number steadily declined through the years, falling to only 600 disclosures in 2017.
Post-Sept. 28 IRS programs, etc. regarding offshore accounts. IRS said that it will maintain a pathway for taxpayers who may have committed criminal acts to voluntarily disclose their past actions and come into compliance with the tax system. IRS said that it will announce updated procedures soon.
A separate program, the Streamlined Filing Compliance Procedures, for taxpayers who may have been unaware of their filing obligations, will continue to be available for now, but IRS said it may end this program too at some point. The implementation of the Foreign Account Tax Compliance Act (FATCA) and the ongoing efforts of IRS and the Department of Justice to ensure compliance by those with U.S. tax obligations have raised awareness of U.S. tax and information reporting obligations related to undisclosed foreign financial assets.
Take Action Now
If you have offshore assets that you have not reported, it's imperative that you take action immediately. Please contact our office to schedule a confidential consultation to discuss your options.