The Internal Revenue Service (IRS) is shutting down the program that helps taxpayers with international asset compliance issues.
The Offshore Voluntary Disclosure Program (OVDP) will end Sept. 28, nine years after it was formed by the IRS to help taxpayers bring undisclosed international assets into compliance with U.S. tax laws. The IRS said it’s ending the OVDP because of declining participation and increased awareness of offshore tax and reporting obligations. Usage of the program peaked in 2011 with nearly 18,000 taxpayers participating. In 2017, only 600 taxpayers utilized the program.
Since the OVDP launched in 2009, there have been more than 56,000 disclosures with the IRS amounting to more than $11 billion in collections. KraftCPAs has helped several clients through the reporting process.
A top IRS priority
Despite ramping down the OVDP, the IRS will continue to aggressively target offshore tax avoidance, which remains one of the IRS’s “Dirty Dozen” tax scams this year.
“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, chief of the IRS Criminal Investigation division. “Stopping offshore tax noncompliance remains a top priority of the IRS.”
Aside from voluntary reporting programs, the IRS will use other methods to address offshore tax avoidance, including taxpayer awareness measures, investigating whistleblower leads, civil examinations and even criminal prosecution.
Taxpayers looking to take advantage of the OVDP should act soon, but the end of the program does not eliminate options for reporting previously undisclosed foreign accounts. Many taxpayers who (unwilfully) failed to report such assets have come into compliance through the Streamlined Filing Compliance Procedures program, which will remain in place. Other options for such non-compliant taxpayers include delinquent FBAR (Report of Foreign Bank and Financial Accounts) submission procedures, and delinquent international return submission procedures.
We can help
We recommend that potentially liable taxpayers seek professional assistance quickly in order to utilize the OVDP and to avoid increased fines or penalties from the IRS. If you believe you may have overlooked your obligation to report foreign accounts, or if you’re unsure if you are required to report and pay tax on such accounts, your KraftCPAs tax advisor can help you comply. Give us a call today.
For additional information, you can also consult the IRS’s OVDP FAQs page.