We originally posted on March 13, 2018 IRS to End OVDP Sept. 28 – Last Chance for Taxpayers With Undisclosed Foreign Assets! where we discussed that the Internal Revenue Service announced in IR-2018-52 that it will begin to ramp down the 2014 Offshore Voluntary Disclosure Program (OVDP) and close the program on Sept. 28, 2018.
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.
The IRS 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.
1. Voluntary Disclosure
Taxpayers who willfully failed to report income and assets will no longer be able to use OVDP but should be able to comply through updated IRS compliance procedures. The IRS is in the process of reviewing the Internal Revenue Manual ("IRM") Voluntary Disclosure Practice. Taxpayers who want more information about IRS’s Voluntary Disclosure Practice can click Internal Revenue Manual (IRM) 220.127.116.11. Taxpayers who made non-willful mistakes or omissions on their tax returns should file amended returns or delinquent returns as soon as possible.
2. Streamlined Filing Compliance
FAQ#6. Are there any changes to the Streamlined Filing Compliance Procedures with the closure of the 2014 OVDP? No. The Streamlined Filing Compliance Procedures will remain available after the 2014 OVDP closes. The IRS encourages taxpayers who have offshore compliance issues and meet all of the qualifications of the Streamlined Filing Compliance Procedures to use these procedures while they are available. Only taxpayers that can certify under penalties of perjury that their conduct was non-willful may use the Streamlined Filing Compliance Procedures.
3. Delinquent FBAR Submission
FAQ#9. Will the delinquent FBAR submission procedures and the delinquent international information return submission procedures remain available after the 2014 OVDP closes? Yes. The delinquent FBAR procedures and the delinquent international information return procedures will remain available for eligible taxpayers after September 28, 2018. Both procedures are for taxpayers that have information reporting failures but no tax noncompliance
4. Late Returns With Reasonable Cause Statement
Taxpayers who do not need to use the OVDP or the Streamlined Filing Compliance Procedures to file delinquent or amended tax returns to report and pay additional tax, but who:
• have not filed one or more required international information returns,
• have reasonable cause for not timely filing the information returns,
• are not under a civil examination or a criminal investigation by the IRS, and
• have not already been contacted by the IRS about the delinquent information returns
should file the delinquent information returns with a statement of all facts establishing reasonable cause for the failure to file.
You Should Rectify Any Unreported Offshore Accounts NOW!
As the IRS continues to combat offshore tax avoidance and evasion using:
• FATCA Information
• 150 Offshore Banks Turning Over Names To The IRSyour radio
• Data Mining
• whistleblower leads,
• civil examination and
• criminal prosecution.
Click How Will the IRS Know About My Foreign Account? to learn the answers about “How will they (IRS) know about my Foreign Account?;” that noncompliant US taxpayers ask when they are considering how (or whether) to come clean and inform the IRS about their previously undisclosed foreign financial accounts.
Have Been Indicted Related To International Activities
Through The Work Of IRS
Criminal Investigation Since 2009.
The implementation of the Foreign Account Tax Compliance Act (FATCA) and the ongoing efforts of the 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.