Offshore Voluntary Disclosure Program (OVDP)
The Internal Revenue Service offers an amnesty program for those who have underreported or failed to disclose foreign source income, foreign assets, foreign interests in financial accounts, or have failed to file/misfiled informational reports with the IRS. This amnesty program is known as the Offshore Voluntary Disclosure Program or OVDP. However, the Offshore Voluntary Disclosure Program is not without its problems and individuals should seek advice from a tax attorney when considering entering into the OVDP.
The Offshore Voluntary Disclosure Program is available to:
- Those taxpayers not already identified by the U.S. Government or whose identity has not already been revealed to the U.S. Government by a foreign bank or institution, tipster, or as part of a plea agreement with an individual already identified or participating. A Taxpayers' eligibility for OVDP can be terminated once the U.S. government has taken action with their specific financial institution.
- The OVDP is open for an indefinite period. This means that the program can close at anytime and without notice.
- The IRS may change the terms of the OVDP.
Taxpayers who do not enter the Offshore Voluntary Disclosure Program voluntarily risk detection by the IRS, criminal prosecution, and substantially higher penalties, including the 75% fraud penalty and foreign information return penalties.