Last Call for OVDP!
The Internal Revenue Service issued a news release on Tuesday announcing it will close down the 2014 Offshore Voluntary Disclosure Program (OVDP) on September 28, 2018. By alerting taxpayers now, the IRS intends that any U.S. taxpayers with undisclosed foreign financial assets have time to use the OVDP before the program closes.
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“Taxpayers have had several years to come into compliance with U.S. tax laws under this program,” said Acting IRS Commissioner David Kautter. “All along, we have been clear that we would close the program at the appropriate time, and we have reached that point. Those who still wish to come forward have time to do so.”
The IRS notes that the end of the current program is a result of increased third-party reporting and awareness of U.S. taxpayers of their offshore reporting obligations.
“The IRS remains actively engaged in ferreting out the identities of those with undisclosed foreign accounts with the use of information resources and increased data analytics,” said Don Fort, Chief, IRS Criminal Investigation. “Stopping offshore tax noncompliance remains a top priority of the IRS.”
Streamlined Procedures and Other Options
The Streamlined Filing Compliance Procedures 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.
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 with respect to undisclosed foreign financial assets. Because the circumstances of taxpayers with foreign financial assets vary widely, the IRS will continue offering the following options for addressing previous failures to comply with U.S. tax and information return obligations with respect to those assets:
- IRS-Criminal Investigation Voluntary Disclosure Program;
- Streamlined Filing Compliance Procedures;
- Delinquent FBAR submission procedures; and
- Delinquent international information return submission procedures.
The Streamlined program is still available. However, the IRS’ stance regarding taxpayers having a heightened awareness of offshore reporting obligations may make it more difficult to convince the IRS that there was no willful conduct involved in not filing past tax returns or disclosures. It should also be noted that the Streamlined program does not provide the level of assurance the OVDP program does regarding criminal prosecution or final penalties.
Jeffrey M. McCann, CPA
Jeffrey McCann oversees the delivery of a full suite of tax and consulting services accommodating the annual expatriate life cycle for businesses with globally mobile employees. He also provides tax and planning services for executives or high net worth individuals with or without cross-border reporting issues or other foreign disclosure requirements; advises regarding US expatriation planning and compliance issues and has extensive experience working with the IRS voluntary disclosure program and streamlined filing procedures. Contact Jeff at firstname.lastname@example.org or +1 248.244.3065.