Originally launched in 2009, the Offshore Voluntary Disclosure Program (OVDP) has been allowing U.S. taxpayers to voluntarily resolve noncompliance of unreported foreign financial assets and failure to file foreign information returns for offshore activities; however, this program will be coming to an end this year, meaning, this is the “Last Call” to disclose certain offshore investments to the IRS if you want to avoid criminal charges or large penalties.
After it started, taxpayers had used the OVDP to comply voluntarily and pay back taxes, interest, and penalties to the IRS, and avoid criminal prosecution. The program has been modified through the years, but on March 13, 2018, the IRS announced the program will come to an end on September 28, 2018.
The IRS hopes that announcing it ahead of time gives enough time to U.S. taxpayers who benefit from this program, to take advantage before it ends. Acting IRS Commissioner David Kautter said: “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.”
The U.S. taxpayers who this program should concern includes those who need to file:
- FinCen114 – Report of Foreign Bank and Financial Accounts (FBAR), for foreign financial accounts that contain more than $10,000 in the aggregate;
- Form 8938– Statement of Specified Foreign Financial Assets, for foreign assets above a certain thresholds;
- Form 3520– Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts, for certain foreign gifts; and
- Form 5471– Information Return of U.S. Persons with Respect to Certain Foreign Corporation, for certain foreign entities.
- Form 5472 – Information Return of 25% Foreign-Owned U.S. Corporation or Foreign Corporation Engaged in U.S. Trade or Business
- Form 2555 – Foreign Earned Income
Although the IRS intends to close the program, it will continue educating taxpayers about the international activities, and using tools like whistleblowers leads, civil examination and criminal prosecution to indict taxpayers’ violations.
Don Fort, Chief, IRS Criminal Investigation said: “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. Stopping offshore tax noncompliance remains a top priority of the IRS.”
This is the final opportunity for taxpayers with foreign tax compliance exposure, to indicate the facts and establish a reasonable cause for the failure to comply with U.S. tax laws, and come into compliance, before the program ends. If you will be affected by this change, take immediate action to evaluate and address any past noncompliance before September 28, 2018, to avoid criminal prosecution.
Many times, in these delinquent cases, there are no taxes due, only the disclosure of foreign assets is required, but minimizing the penalties (basically $10,000 per missing form per year or more) are the big issue for foreign compliance cases. Call our office for more information from any of our tax specialists. File your delinquent disclosures or taxes today, before it is too late to use this special tax program!
Give us a call today (305) 477-5671.
Rosillo & Associates, P.A. is located at 7950 NW 53 St. Suite 221, Doral, FL.