The IRS will close the 2014 Offshore Voluntary Disclosure Program (OVDP) on Sept. 28, which will give U.S. taxpayers with undisclosed foreign financial assets enough time so that they can still avail of the program.
“Taxpayers have had several years to come into compliance with U.S. tax laws under this program,” said Acting IRS Commissioner David Kautter, in a prepared statement. “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 program’s closure indicates improvements in third-party reporting and an increased awareness of U.S. taxpayers’ offshore tax and reporting obligations, according to the IRS.
The September deadline is firm. According to the IRS, voluntary disclosures in the 2014 OVDP must be received or postmarked by Sept. 28 and can’t be partial, incomplete or placeholders.
Information about frequently asked questions and answers concerning the OVDP closure are available here.
More than 56,000 taxpayers have used the program since its introduction in 2009. They have paid $11.1 billion in back taxes, interest and penalties.
Disclosures peaked in 2011 with 18,000 taxpayers but has declined. In 2017, 600 disclosures were made.
The 2014 OVDP is a modified version of the program that began in 2012, which in turn followed voluntary programs in 2009 and 2011. The OVDPs allow taxpayers to voluntarily resolve former non-compliances concerning foreign financial assets and failures to file foreign information returns.
However, the IRS makes clear its toolbox includes other means of fighting offshore tax avoidance. Those tactics include taxpayer education, tips from whistleblowers, civil audits and criminal prosecution.
The agency, in fact, has indicated 1,545 taxpayers on criminal violations connected to international actions. Of those, 671 taxpayers were indicted on international criminal tax violations.
“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 Don Fort, head of IRS Criminal Investigation. “Stopping offshore tax noncompliance remains a top priority of the IRS.”
For taxpayers who claim ignorance about filing requirements, the IRS is keeping its Streamlined Filing Compliance Procedures in place for “eligible taxpayers” — though how they qualify for that isn’t defined. However, the IRS says it may also end that program at an as yet undetermined time.
Besides the streamlined procedures, the IRS will continue offering several other options for handling prior compliance failures. Those include:
IRS-Criminal Investigation Voluntary Disclosure Program
Delinquent FBAR submission procedures
Delinquent international information return submission procedures.
More information about the options can be found here.
Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.