The Internal Revenue Service terminated its 2014 Offshore Voluntary Disclosure Program (OVDP) September 28, 2018.
“Taxpayers have had several years to come into compliance with U.S. tax laws under this program,” said Acting IRS Commissioner David Kautter. “All along, we have been clear that we would close the program at the appropriate time, and we have reached that point.”
Since the OVDP’s initial launch in 2009, more than 56,000 taxpayers have used one of the programs to comply voluntarily. All told, those taxpayers paid a total of $11.1 billion in back taxes, interest and penalties. The planned end of the current OVDP also reflected advances in third-party reporting, such as banks located overseas, and increased awareness of U.S. taxpayers of their offshore tax and reporting obligations.
The number of taxpayer disclosures under the OVDP peaked in 2011, when about 18,000 people came forward. The number steadily declined through the years, falling to only 600 disclosures in 2017. However, now, as of September 30, 2018, most countries had signed agreements with the U.S. Treasury for bilateral exchange of information on American’s offshore bank accounts. This banking information is transmitted overnight via the Internet from offshore banking institutions to the U. S. Treasury which then sends this onto the IRS to compare to your tax returns to determine if you have included interest income from these bank accounts to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (Fin CEN).
The IRS states that it will continue to use tools such as whistleblower leads, civil examination and criminal prosecution. Since 2009, IRS Criminal Investigation has indicted 1,545 taxpayers on criminal violations related to international activities, of which 671 taxpayers were indicted on international criminal tax violations.
“The IRS remains actively engaged in ferreting out the identities of those with undisclosed foreign accounts with the use of information resources and increased data analytics,” said Don Fort, Chief, IRS Criminal Investigation. “Stopping offshore tax noncompliance remains a top priority of the IRS.”
Streamlined Procedures and Other Options
A separate program, the Streamlined Filing Compliance Procedures, for taxpayers who might not have been aware of their filing obligations, has helped about 65,000 additional taxpayers come into compliance. The Streamlined Filing Compliance Procedures may end in October 2018.
The implementation of the Foreign Account Tax Compliance Act (FATCA) and the ongoing efforts of the IRS and the Department of Justice to ensure compliance by those with U.S. tax obligations have raised awareness of U.S. tax and information reporting obligations with respect to undisclosed foreign financial assets.
As you read this it is too late for any Amnesty offering but there may still be options for you, depending on your particular reporting and financial circumstances. As with any IRS matters, it is always best to seek legal advice and determine the best course for proceeding to become current with the IRS before they find you and being a criminal examination. Call us to review your particular concerns or situation; attorneys have “attorney/client privilege” to keep our conversation away from summons of our communications which is not true of CPA or Enrolled Agents. Remember, you matter can accelerate very quickly to a criminal investigation. It is our job to provide guidance and to project you to the best of our abilities.
Michael B. Nelson, Tax Attorney