Amnesty to End for Affected Taxpayers with Foreign Financial Assets
The IRS has announced it will discontinue its Offshore Voluntary Disclosure Program (OVDP) on Sept. 28, 2018. The program, which was intended as a temporary amnesty program for taxpayers who willfully failed to report foreign financial assets, has existed in some form since 2009. By providing taxpayers notice now, the IRS hopes to provide any U.S. taxpayer with undisclosed foreign financial assets the time to take advantage of the program.
U.S. taxpayers must report certain offshore assets by filing a Report of Foreign Bank and Financial Assets (FBAR) if the combined value of their accounts in a calendar year exceeds $10,000, even when the accounts produce no taxable income.
The OVDP, which has provided the opportunity to pay taxes owed in exchange for protection from criminal liability, has allowed such taxpayers to resolve their civil tax liabilities at reduced rates.
“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. Those who still wish to come forward have time to do so.”
According to the IRS, more than 56,000 taxpayers have taken advantage of the OVDP for a total of $11.1 billion in back taxes, interest and penalties to the IRS. However, the number of taxpayer disclosures has steadily declined from 18,000 people at the peak of the program in 2011 to only 600 disclosures last year.
The IRS cites a growing awareness of offshore tax and reporting obligations, and a significant decline in the number of taxpayers participating in the OVDP as reasons for terminating the program. The IRS will continue to enforce offshore compliance with tax and FBAR requirements using information received under the Foreign Account Tax Compliance Act (FATCA), as well as through other means.
Individuals should take advantage of the OVDP to report foreign bank accounts that haven’t been reported previously. Offshore voluntary disclosures must be completed in full and received or postmarked by Sept. 28, 2018. Goldin Peiser & Peiser can assist affected taxpayers with preparing the required compliance.
Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.