Insights
The Internal Revenue Service (IRS) has announced that it will be closing its current Offshore Voluntary Disclosure Program (OVDP) on September 28, 2018. The news comes as the IRS noted a significant decrease in the number of taxpayers participating in OVDP since its initial launch in 2009.
Beginning in 2014, the current OVDP had only 600 disclosures in 2017 compared to more than 18,000 taxpayers who came forward in 2011. Overall, the IRS has collected approximately $11.1 billion in back taxes, interest, and penalties since 2009. However, the continuing decline in participation coupled with an increased awareness amongst U.S. taxpayers of their reporting obligations has resulted in the IRS closing the program.
In order to participate under the current OVDP, the IRS requires all submissions be made before it closes the program. To qualify, the submissions must be complete; partial or “placeholder” submissions will not be accepted. However, the IRS notes that the circumstances for U.S. taxpayers with foreign financial assets vary significantly. The IRS will continue to offer a range of options to address previous non-compliance with respect to foreign income and assets, including:
- IRS-Criminal Investigation Voluntary Disclosure Program;
- Streamlined Filing Compliance Procedures;
- Delinquent FBAR submission procedures; and
- Delinquent international information return submission procedures.
The 2014 OVDP offers a considerably lower penalty rate of 27.5% compared to the much higher penalty rates that can apply if the IRS discovers offshore assets or accounts on its own accord. The 2014 OVDP may still be an option to consider for those wishing to come forward.
Full details can be found on the IRS website:
