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Offshore Voluntary Disclosure Program (OVDP)
(This page was updated in 2018 with important changes to this program.)
In 2009 the IRS began a tax ‘amnesty’ program – the 2009 offshore voluntary disclosure program (OVDP). This program allows individuals with undisclosed income from offshore accounts to become compliant with their US tax obligations.Similar programs were opened in 2011 and 2012.
These programs have encouraged more than 45,000 voluntary disclosures and the back taxes, penalties and interest collected amounts to more than $6.5 billion.
The 2012 program has since been revised reflecting the following changes:
- Reduced penalty structure has been removed
- Penalties must be paid at the time of the OVDP submission
- Voluminous records can now be submitted electronically
Despite carrying higher penalties than previously, the program has continued to offer taxpayers clear benefits by allowing them to disclose foreign accounts rather than risk criminal prosecution if the IRS finds them before they opt into voluntary disclosure. However, in 2018, the IRS announced they would be closing OVDP in September 2018.
It is important to utilize this program now before the IRS closes that door.
The changes to the program also included an increase from the 27.5% penalty to 50% in some cases. This occurs if either a foreign financial institution at which the taxpayer has or had an account, or a facilitator who helped the taxpayer establish or maintain an offshore arrangement has been publicly identified as being under investigation or as cooperating with a government investigation and can only be avoided if a pre-clearance letter is submitted by the 4th of August 2014.
Transition between Programs
For those individuals already participating in a previous OVDP process, it is possible to move across to the expanded Streamlined Filing Compliance Procedures, where the taxpayer meets specified eligibility requirements.
We are fully informed of all IRS changes and have completed many successful cases of Offshore Voluntary Disclosure for clients. Please call or email us for a confidential consultation to discuss your US tax requirements and ensure you don’t miss any deadlines.
Did you Know?
Fact SevenThanks to FATCA banks must disclose their American account holders to the IRS or local tax authority.
Fact SixThe IRS is actively looking for non compliant US persons.
Fact FiveIt takes an average of 16 hours to do IRS Form 1040.
Fact FourThere are over 500 IRS tax forms.
Fact ThreeSince 1916, illegal income has been taxable.
Fact TwoUS persons must file tax returns no matter where they live and work.
Text One7 million Americans abroad
only 500,000 compliant