IRS Offshore Voluntary Disclosure Program Ending September 28, 2018

The IRS has announced that the 2014 Offshore Voluntary Disclosure Program (OVDP) will end on Sept. 28, 2018. Although the OVDP is ending, the IRS intends to continue offshore enforcement efforts after the program ends. Under the OVDP, taxpayers who did not file a Report of Foreign Bank and Financial Accounts (FBAR, reported on FinCEN Form 114) or report income from foreign assets may come forward before the IRS identifies them and mitigate (but not eliminate) the risk of criminal prosecution. Taxpayers accepted into the OVDP are generally subject to an “offshore penalty” of 27.5% of the highest aggregate value of foreign income-producing assets owned during the disclosure period (the most recent eight tax years for which the due date has passed) in lieu of certain other penalties. However, a 50% offshore penalty may apply if a taxpayer used an institution or facilitator that has been identified as being under investigation. After entering the OVDP, taxpayers may “opt out” of the OVDP penalty structure and remain subject to full examination and all statutory penalties, which for some taxpayers could be less than the OVDP penalties. The IRS’s Streamlined Filing Compliance Procedures and Delinquent FBAR and International Information Return Submission Procedures will remain available to eligible taxpayers after the end of the OVDP, until further notice. The IRS’s traditional voluntary disclosure program will also remain available after the end of the OVDP. Program details are available on the IRS website (www.irs.gov) and in its “Frequently Asked Questions and Answers”.  See 2012 Offshore Voluntary Disclosure Program.  Taxpayers considering a voluntary disclosure should seek advice from a tax attorney.

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