Earlier this month, the IRS announced that the 2014 Offshore Voluntary Disclosure Program (OVDP) will be permanently closed on Sep. 28, 2018. For individuals with undisclosed offshore accounts, the time is now to come into compliance, or face the inevitable IRS crackdown that will follow when the amnesty program closes.
“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.”
56,000 taxpayers have taken advantage of the OVDP program, paying over $11 bn in back taxes, interest and penalties. At the height of the program in 2011, over 18,000 people voluntary reported. The numbers have steadily fallen to a low of only 600 reports in 2017, signaling that interest in the program has either waned or that most of that most of the non-reporting parties have now come into compliance. It is likely that the IRS will be less lenient on individuals who have failed to take advantage of the lower penalties available under the voluntary disclosure program.
The IRS said it would continue to use tools besides voluntary disclosure to discourage offshore tax avoidance, including taxpayer education, whistleblower leads, civil examination and criminal prosecution.
“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 IRS Criminal Investigation chief Don Fort in a statement. “Stopping offshore tax noncompliance remains a top priority of the IRS.”
In one article in Forbes, by tax writer Kelly Phillips Erb of “Taxgirl Blog” fame, “IRS Announces End to Offshore Voluntary Disclosure Program,” the author points out that FBAR requirements grew by 17% between 2010 and 2015, signaling greater compliance with the FBAR and FATCA provisions.
If you have questions about FBARS, offshore voluntary disclosure or other offshore reporting programs to avoid IRS penalties give us a call at (201) 529-8024 or e-mail me at [email protected]
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