IRS OVDP Ending in September: Now is the Time to Make a Voluntary DisclosureNews
Posted in on March 27, 2018
The IRS recently alerted the public that it will be ending the Offshore Voluntary Disclosure Program on September 28, 2018 and is encouraging taxpayers with undisclosed offshore accounts to step forward now to disclose these accounts. Acting IRS Commissioner David Kautter explained that taxpayers have had the opportunity to participate in the program and bring their accounts into compliance with U.S. tax laws since 2009. The intent behind making the announcement at this point in time, is to encourage taxpayers who are not in compliance to enter the OVDP now while there is still time to do so.
Should You Make an IRS Voluntary Disclosure Under the OVDP?
If you are a taxpayer with undisclosed foreign accounts or assets you may be wondering whether you should take the IRS’s advice to come forward now before the program ends. While everyone’s situation is different and should be carefully evaluated by an experienced tax law professional, tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, believes that for many people, now may be the right time to make a voluntary disclosure of offshore accounts that were not reported to the IRS in the past.
The 2014 OVDP, like its earlier OVDP predecessor programs, encourages taxpayers to voluntarily disclose their foreign financial accounts by providing opportunities to avoid criminal prosecution and minimize taxpayer exposure to civil monetary penalties. When an eligible taxpayer enters the OVDP and complies with all program terms and obligations the IRS will issue Form 906, Closing Agreement. Signing the Closing Agreement and paying the required penalties fully resolves the tax issues associated with previously unreported offshore account. Prior to executing the Closing Agreement, a taxpayer can choose to “opt-out” of the OVDP in an attempt to negotiate a reduction or waiver of penalties. Because the opt-out process comes with risks and takes much longer, you should always work with your tax lawyer to determine whether opting out is advisable for your individual situation.
What Options Will I Have If I Don’t Make an Voluntary Disclosure Before September 28, 2018?
The IRS has made it clear that submissions for the 2014 Offshore Voluntary Disclosure Program must be received or postmarked by September 28, 2018. All submissions must be complete and comply with OVDP program requirements - no partial or incomplete submissions will be accepted. If you fail to make your submission to the 2014 OVDP in time, the IRS will still offer other existing options to remedy offshore non-compliance.
These options include the following IRS programs:
- IRS-Criminal Investigation Voluntary Disclosure Program
- IRS Streamlined Filing Compliance Procedures
- Delinquent FBAR Submissions Process
- Delinquent International Information Return Submissions Process
Even if you are able to take action before the September 28, 2018, the 2014 OVDP may not be advisable for your situation. In particular, if your failure to make a disclosure of your offshore accounts and assets was not “willful” ( generally meaning that you were not intentionally attempting to evade or avoid your tax obligations) and you meet all other IRS requirements, you may be able to utilize the IRS Streamlined Filing Compliance Procedures (“Streamlined Process”) to bring your offshore accounts into compliance with the law. While the eligibility criteria for the Streamlined Process are more rigid than the full OVDP and the process requires taxpayers to execute a non-willful certification, the penalties for unreported offshore income is reduced to 5% under this initiative.
Figuring out which voluntary disclosure program is right for you is not an easy process and is best handled by a qualified tax attorney. Call Kevin E. Thorn, Managing Partner of Thorn Law Group, today at 202-270-7273 or email firstname.lastname@example.org to discuss your options. You can also learn more about voluntary disclosures and IRS’s decision to wind down the OVDP program by reviewing our in-depth article: IRS OVDP Offshore Disclosure Program Ending Soon!