Did you know that the IRS has a special program that allows most taxpayers with undisclosed income in “offshore accounts” an opportunity to get current with their tax obligations, before being detected by the tax authorities and likely facing serious consequences?
The program is known as the Offshore Voluntary Disclosure Program, or OVDP. Since its inception in 2009, the IRS has made several modifications to the OVDP that have made it even easier for taxpayers with undisclosed offshore assets to come into compliance. In light of recent crackdowns on money laundering by the Departments of Justice and Treasury, the IRS was pleased to announce in a press release, that the program has collected 10 billion dollars in taxes, interest, and penalties since it was conceived.
A Major Milestone for the OVDP
According to the agency release, “55,800 taxpayers have come into the Offshore Voluntary Disclosure Program (OVDP) to resolve their tax obligations, paying more than $9.9 billion in taxes, interest and penalties since 2009. In addition, another 48,000 taxpayers have made use of separate streamlined procedures to correct prior non-willful omissions and meet their federal tax obligations, paying approximately $450 million in taxes, interest and penalties.”
In recent years it has been increasingly more difficult for taxpayers to hide assets in traditional havens such as Switzerland and the Cayman Islands. Under new Foreign Account Tax Compliance Act (FATCA) rules, and a growing network of inter-governmental agreements (IGAs) between the U.S. and partner jurisdictions, over the 2 years, more foreign banks have been willing to provide information on potential non-compliance by U.S. taxpayers.
Pay now – or Pay Much More Later!
The information is out there, and is getting reported by the foreign banks with increasing regularity. The OVDP gives taxpayers an opportunity to disclose foreign financial accounts and assets now, rather than risk detection by the IRS at a later date, and face more severe penalties and possibly even criminal charges.
Taxpayers who think they may need to take advantage of the OVDP to come into compliance with their U.S. tax obligations, are urged to discuss their situation with the international tax experts at MBAF.
Compliance with the modified Offshore Voluntary Disclosure Program (OVDP), can be complex. If you would like to benefit from our expertise in these areas, or if you have further questions on this Advisory, do not hesitate to contact our International Tax specialists, or call us at 1-800-239-1474.