Every good thing must come to an end, and the Internal Revenue Service (IRS) Offshore Voluntary Disclosure Program (OVDP) is one of them.
The OVDP program sunsets with a hard deadline of September 28, 2018. The program has run its course, and according to the IRS, “Taxpayers have had several years to come into compliance with U.S. tax laws under this program. 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.”
First launched in 2009, the program provided taxpayers the opportunity to come forward voluntarily to report errors or omissions in their offshore tax reporting responsibilities. As a result of the program, the IRS collected $11.1 billion in interest, penalties, and back tax payments while allowing taxpayers to avoid criminal tax investigation.
The program has been a success. Our firm has worked with many clients to clear accounts and submit reports while avoiding larger penalties, assessments, and tax audit. The IRS reports 2011 was the peak performance year for the OVDP, with approximately 18,000 voluntary filings. By 2017, only 600 submissions were filed, triggering a review of the effectiveness and necessity of the program.
The OVDP relaunched in 2012, and the 2014 program which is now closing, was a retooling of the 2012 process.
Why and where now?
One driver of the OVDP was the desire to provide delinquent taxpayers a path forward while educating consumers about offshore tax issues and the tightening of regulatory reporting action on foreign assets held by US residents.
Despite a decrease in federal budget, the IRS continues to build investigative teams focused on taxpayers who fail to report, or underreport foreign-held assets. Through a tip, whistleblower, leak, or IRS criminal tax investigation, high-ticket value and assets hidden in secrecy jurisdictions remain a prime target of the IRS. If anything, the closing of the OVDP signals an end to a more lenient approach to offshore tax offenders.
In the intervening years, the IRS has upped its game with data analytics, and stronger reporting requirements for foreign and partner jurisdictions that help to pull back the curtain on taxpayers involved in tax crime.
For entities and individuals with unreported foreign assets, timing is now tight to take advantage of this program. Complete submissions must be postmarked by September 28, 2018. There are no extensions and partial or placeholder submissions will not be considered.
If you wish to take advantage of the program—contact an experienced tax attorney rapidly to ensure your filing is timely, complete and accurate. The OVDP party is over.
Skilled FBAR and FATCA attorneys in Cleveland, Chicago, and internationally
Robert J. Fedor, Esq., LLC provides strategic legal representation if you or your company is challenged with a tax controversy, criminal tax charge, or question about your foreign holdings. We provide knowledgeable, discrete legal counsel and representation. Contact us or call 800-579-0997 today.