The Internal Revenue Service has announced the end of the Offshore Voluntary Disclosure Program (OVDP). The deadline for full and final submissions has been announced as 28 September 2018.
The OVDP program has been around in one form or another since 2009. It is designed to enable taxpayers with undisclosed assets and foreign financial accounts to come into compliance with United States tax laws.
The latest program, the 2014 OVDP program has been in place since 2014 to enable taxpayers who have willfully failed to file their United States federal income tax returns and foreign bank account reports (‘FBARs’), to avoid high civil penalties and criminal prosecution should they take alternative action or no action.
The submission to the IRS consists of eight prior years’ income tax returns, FBARs, various disclosures relating to those documents, payment of the miscellaneous offshore penalty amounting to 27.5%[1] of the highest balance of their foreign financial accounts.
The IRS advises that it will provide information as to the procedures for voluntary disclosures after 28 September 2018 and that no changes to the Streamlined Filing Compliance Procedures are currently being made. At this stage, the IRS advises that these procedures will continue to be available for individuals who have non-wilfully failed to file United States income tax returns and FBARs.
[1] The penalty increases to 50% if a foreign financial institution, at which a taxpayer has or has had an account and is being investigated, or is co-operating with a government institution.