The deadline for voluntarily disclosing offshore assets is rapidly approaching. If you are aware, or suspect, that your offshore tax matters are not compliant, now is the time to act.
The Offshore Voluntary Disclosure Program (OVDP) is a fast-concluding program offered though the Internal Revenue Service (IRS) to assist taxpayers who might otherwise face penalties and criminal liability for undisclosed foreign financial holdings. The aims of the program were two-fold:
- Help individuals avoid criminal liability
- Provide a process for resolving tax issues and becoming compliant
With the rise of data mining, enhanced and enacted regulatory tools, and investigative focus, the IRS is better able to identify hidden foreign bank accounts and undisclosed income. As well, the IRS reports that participation in the program has declined as taxpayers have become more familiar with filing requirements. Overall, these developments point to sunsetting the OVDP.
What if you still have undisclosed foreign assets?
For those with applicable assets that remain undisclosed, the easiest option is to move quickly to file with the program before it closes.
To take advantage of the OVDP, submissions must be postmarked by September 28, 2018. Unless you are a tax professional, it is a good idea for you to work with a tax attorney in order to ensure your application is complete and correct on the first try. The IRS notes submissions received at that time “may not be partial, incomplete, or placeholder submissions.”
Because there will be no opportunity to amend the submission, it is wise to speak with your tax attorney to commence preparation of your submission now, if you intend to take advantage of this program.
If you delay and miss the deadline, there is no guarantee that an IRS criminal tax investigation will not follow a late filing. There are significant penalties and liabilities associated with failure to file appropriate reports on foreign-held value. On its website, the IRS notes “Additional information on how to make disclosures after September 28, 2018 will be posted on irs.gov.” We will wait and see.
In addition, the Streamlined Filing Compliance Procedures remain available after the OVDP program closes. The Streamlined Procedures were initiated in 2012 and remain in place to help taxpayers with the following:
- Provide a straightforward process for filing delinquent or amended tax returns
- Offers terms for addressing tax and penalty issues when filing late or amended returns
- Provides terms for approaching overdue taxes and penalties
These objectives are different from the OVDP and while they provide a process and relief, they do not replace the OVDP. Taxpayers who quietly amend their current return to reflect undisclosed foreign bank account value will be subject to applicable civil and criminal penalties.
If you have undisclosed offshore assets, talk to an experienced tax lawyer to create a plan toward becoming compliant—and do it soon.
Skilled tax defense if you face an IRS criminal tax investigation
The tax attorneys at Robert J. Fedor, Esq., LLC deliver experienced legal representation if you are involved in a tax controversy or questioned about your foreign holdings. With offices in Chicago and Cleveland, we serve local and international clients. Call 800-579-0997 or contact us today.