Critical Points to Take Note of Regarding the Offshore Voluntary Disclosure Program

Time is running out on those who are not in compliance with US tax regulations! If you are one of these, you may be unsure about what to do next, especially considering that this issue affects more than yourself. The IRS has changed a lot of procedures over the last several years to try to help American citizens to be more compliant with their filing requirements when it comes to reporting foreign financial accounts and assets. These procedural changes have sometimes left people with more decisions to make and questions to ask. Here are some critical points to be aware of when considering entering into the Offshore Voluntary Disclosure Program option.

Perhaps you have noticed that this has been in the news a bit recently. In case you haven’t heard, the program is ending soon. The Offshore Voluntary Disclosure Program comes to an end on September 28, 2018. The program has helped a lot of taxpayers come into compliance over the past ten years, and in so doing, it has recovered over $11 billion in lost revenue, according to the news release from the IRS. However, it is not as profitable as it once was, and the amnesty is coming to an end. Are you eligible to take part before the program ends?

What is it

The Offshore Voluntary Disclosure Program is a final opportunity for those who have been willfully negligent in complying with regulations—that is, for those who were aware that they were supposed to report foreign income but didn’t and are willing to make the necessary disclosures now. It is not for people who are already under criminal investigation or civil examination, or for those who have previously entered other amnesty programs, such as the Streamlined program.

Who is eligible?

The Offshore Voluntary Disclosure Program is different from the Streamlined Program, which is aimed more to help those who failed to disclose their assets due to error or misunderstanding. The OVDP is for those who are aware of their negligence but were unsure of what to do about it. Those who are willing to make a voluntary disclosure to become compliant now would be at risk of criminal prosecution in the future for all failures in filing procedures. It is important to be aware that the money invested and now disclosed must be of legal origin and not derived from criminal activity. You must be willing to file or amend up to eight years in missing tax forms and FBARs, and in exchange for doing so, you won’t be criminally prosecuted for the past 8 years of non-compliance. No such promise will be made after September of 2018. There could be a penalty of up to 50% on the highest of your undisclosed accounts.

Truthful, Timely, and Complete

The IRS expects full disclosure, a willingness to co-operate, and good faith attempts to rectify the situation and pay the penalties before being criminally investigated about your Offshore Voluntary Disclosure Program.

This is not a simple issue, especially if you are in a situation of willful non-compliance. In any income tax situation, there are always questions and concerns, and it is easy to make a mistake when the stakes are high. Mistakes, once made, can be daunting to try to correct. The Offshore Voluntary Disclosure Program, as it was, recognized that there were a great number of people and issues at stake, and there still are. Many people in non-compliance were reluctant to risk their businesses or family wealth to become compliant, and so found themselves in difficult situations. If you have any questions, and if you are not sure of what to do next, seek the help of an international tax lawyer who can advise you on what will happen next. Don’t fail to become compliant while the amnesty program is still open to you.

There will still be some options open if the Offshore Voluntary Disclosure Program is not the right program, but you will need the advice of an international tax consultant. They are experienced in similar situations and can advise you. One thing you can count on, though, is that investigating criminal activity will continue to be a top priority of the IRS, so having an expert on your side will be a big help.

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