The IRS Offshore Voluntary Disclosure Program (OVDP) is closing on September 28, 2018, mere weeks away.
For taxpayers who own foreign assets that are not in IRS compliance, the ending of the OVDP presents a final opportunity to become IRS compliant, avoid criminal charges and much higher penalties if discovered by the IRS.
Readers considering making a voluntary disclosure of offshore assets to the IRS should be aware that the impending closure of the OVDP imposes a significant timing constraint during these final weeks of the OVDP. For instance, there is currently a rush of people to get into the OVDP before it closes, which has resulted in delays in approvals from the IRS. In addition, there is usually a need for information from foreign sources (such as financial statements and income information), which can also take time. Finally, because of the work involved in preparing an OVDP submission, and coordination with other parties (one’s CPA, for instance, along with foreign banks), OVDP applications should be addressed immediately. A last-minute attempt to enter the OVDP just before the closure date of September 28 is not practical nor advisable.
There are strategic considerations as well. For instance, the OVDP is only open to taxpayers who are not already under IRS audit or investigation. A “pre-clearance” requests is the normal way to inquire whether a taxpayer is already under IRS scrutiny. Because it is now taking weeks for the IRS to respond to the “pre-clearance” request, one question to consider is whether you should skip the “pre-clearance” process and proceed to the submission of background information to the IRS. If a taxpayer skips the pre-clearance request and submits information to the IRS, that person has just given the IRS incriminating information that could be used in a criminal tax fraud case or an assessment of civil penalties.
While the OVDP is closing, the “Streamlined” Procedures remain open for taxpayers who are able to certify, under penalties of perjury, that their offshore non-compliance was non-willful. While a taxpayer may believe that he or she is non-willful, the IRS may disagree. Thus, it is important to discuss one’s background facts with an attorney experienced in offshore tax issues who can help in assessing willfulness.
If you have undeclared foreign assets, now is the time to consult with an attorney about how to bring these assets into IRS compliance. After September 28, 2018, the risks and costs will increase substantially. Contact us for a consultation about your offshore issues.
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