Last call for OVDP—maybe
- by Admin
- December 29th, 2015
There is one thing the IRS and we see eye to eye on – taking advantage of one of the IRS’ programs to get in to compliance with your foreign income or asset reporting. It is a “gift” of sorts from the IRS and we’ve been telling you for a few years to jump on it. The IRS is now suggesting you “strongly” consider using one of their recommended paths to come into compliance.
To us, this gentle reminder from the IRS can only mean one of two things—they’re going to do away with the programs, and stop playing nice, or they are going to step up efforts to make your life a living hell.
As you likely know the Offshore Voluntary Disclosure Program (OVDP), the streamlined procedures, and delinquent submissions procedures allow taxpayers who are out of compliance to get back in to compliance and avoid or minimize the potential penalties of continued non-compliance.
Approximately 54,000 taxpayers have taken advantage of the OVDI, and its successor the OVDP, since 2009, garnering some $8 billion for the IRS. Automatic third-party account reporting began in 2015 under the Foreign Account Tax Compliance Act (FATCA). This reporting has given the IRS the upper hand—it is now much less likely that foreign accounts will fly under the IRS’s radar.
Additionally, the Justice Department’s Swiss Bank Program is continuing to reach non-prosecution agreements with Swiss financial institutions that once promoted non-compliance. What is really troublesome is that the IRS is now starting to go after lawyers, accountants, and financial service providers to access their records. If the IRS is successful, the entities and layers between you and your accounts will be useless.
If you are non-compliant and wait to apply for one of the IRS’ amnesty programs to clear up your tax obligations, and the Foreign Financial Institutions (FFI’s) report you first under FATCA, your civil – and potential criminal – penalties will increase dramatically.
The IRS has conducted thousands of offshore-related civil audits producing millions of dollars through information obtained from investigations and under the terms of settlements with FFI’s. Criminal charges have led to billions of dollars in criminal fines and restitutions.
To review the IRS’ amnesty programs, taxpayers with undisclosed income from offshore accounts have the opportunity to voluntarily disclose foreign accounts and get current on tax returns and information reporting obligations. If you wait and the IRS tracks you down later (be assured they will), you will face more severe penalties and possible criminal prosecution.
The streamlined procedures that began in 2012 accommodate a larger group of taxpayers that have unreported foreign financial accounts, but different situations than the taxpayers that fell in the earlier OVDP. Over 30,000 taxpayers have used the streamlined procedures and are currently in compliance with U.S. tax laws.
Once again. If you are out of compliance, take advantage of this generous offer from the IRS using only IRS mandated programs. It’s not how you want to spend your money, but it’s better than the inevitable alternative. Contact Esquire Group to guide you through the amnesty process.