Time is running out for taxpayers with undisclosed foreign assets. On March 13, 2018, the Internal Revenue Service announced that the 2014 Offshore Voluntary Disclosure Program (OVDP) will terminate on Sept. 28, 2018
The OVDP is open to all U.S. taxpayers including citizens and residents that have undisclosed offshore accounts or assets on which taxes have not been paid. The program was specifically designed for taxpayers with potential exposure to criminal liability due to willful failure to report foreign financial assets and accounts and pay all resulting U.S. federal income taxes due. Upon successfully completing the OVDP process, the taxpayer enters into a closing agreement with the IRS that precludes IRS examination of the eight years covered in the OVDP submission. Additionally, and most importantly, the IRS will not recommend criminal prosecution to the Department of Justice for any issues related to the tax noncompliance. Since the OVDP’s initial launch in 2009, more than 56,000 taxpayers have used one of the programs to comply voluntarily.
Under the Foreign Account Tax Compliance Act (FATCA) and the network of intergovernmental agreements between the U.S. and partner jurisdictions, automatic third-party account reporting has entered its third year The IRS continues to receive more information regarding potential non-compliance by U.S. .This information makes it less likely that offshore financial accounts will go unnoticed by the IRS.
With the Offshore Voluntary Disclosure Program coming to a close on Sept. 28, the IRS reminded taxpayers there is a limited amount of time to take advantage of this option to avoid the potential civil penalties.
A separate program, the Streamlined Filing Compliance Procedures, for taxpayers who might not have been aware of their filing obligations, will remain in place and available to eligible taxpayers. As with OVDP, the IRS has said it may end the Streamlined Filing Compliance Procedures at some point.
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