Offshore Voluntary Disclose Program or OVDP was one of the best options US taxpayers with undisclosed offshore assets had when they needed to comply with the national tax laws. The program let the taxpayers report their foreign assets and comply with the national tax laws without having to face fines and criminal lawsuits.
Since U.S. citizens are required to report any financial assets they may hold outside the country when filing their taxes. Not doing so or reporting a false sum can lead to imprisonment and hefty fines worth thousands of dollars. The OVDP was a way to turn the blind eye and let the offshore asset holders avoid criminal liability and punishment, as long as they paid their taxes for those assets.
However, ever since the IRS announced that they will be shutting the program down this year on September 28th, many offshore account holders have started panicking while others misinterpreted this, believing they won’t have to pay taxes for their offshore holdings. However, the IRS will still remain adamant in discovering undisclosed offshore assets and educating U.S. citizens who might have unknowingly failed to disclose these assets.
If you have any offshore assets and thing you might fall under scrutiny or face criminal charges, you still have until September to step forward and disclose those assets. But the fact that OVDP is ending does not mean you don’t have any other options to proceed with in this situation. If you own any undisclosed foreign assets you should consult with a tax attorney specializing in OVDP to get some guidance on how to proceed. In this article, we’ll break down the history of OVDP and what you can do to disclose your offshore assets after it’s gone.
The History of OVDP
The program was launched back in 2009 and revised in 2014. Since then, this revised version has been in action. The program encouraged well over 56 thousand tax payers to disclose their assets and be compliant with the law. The IRS collected $11.1 billion in late taxes, interest rates and fines. However, the number of people participating in the program has decreased drastically in the last couple of years. In 2017, only 600 citizens stepped forward to disclose their assets under OVDP.
Who Can and Should Take Part in the OVDP?
In this case, a U.S. citizen is anyone with citizenship, a green card or legal residence in the United States. People who aren’t residents aren’t considered U.S. citizens, but qualify for OVDP if they spend over 183 days in a year on U.S. soil. OVDP is meant for those citizens who believe they might face criminal prosecution for their undisclosed assets.
Anyone with a broker or bank account outside the United States worth more than $10,000 has to disclose these assets to the IRS. Even if you have $5000 in one country and $5000 in another, you still have to disclose those assets as they exceed the limit. You are required to disclose those assets based on the highest balance any day of the year, rather than year-end balance or average annual balance.
So if you open a bank account in a foreign country to purchase real estate and transfer any amount of money that you immediately use to pay that real estate, you still have to disclose those assets and pay the taxes for them.
So if you have an offshore account, any stock abroad or hold assets in a foreign bank that is under the IRS investigation, you can use OVDP to escape criminal liability and penalties.
What to Do after Offshore Voluntary Disclosure Program is Discontinued?
If you did not report your offshore accounts, foreign income, stocks or other assets, you should consider doing so before September and the termination of the program. The penalties are likely to increase after that deadline. However, even when the OVDP is discontinued, there are still options to disclose your assets and avoid prosecution.
One of those options is the Streamlined Filing Compliance Program. It protects taxpayers who unknowingly did not disclose these assets. The program will continue after OVDP is discontinued, although the IRS warns it may face the same fate as well. Some additional options for these citizens include the Criminal Investigation Voluntary Disclosure Program or Delinquent FBAR submission procedures. If you don’t use the advantages the OVDP offers before it is discontinued you should consult an experienced tax attorney for advice on how to best proceed to protect yourself from prosecution and punishment.
Contact Brunoro Law at 600 W Broadway Suite 700, San Diego, CA 92101, USA; 619-394-8681.