Offshore Voluntary Disclosure Program

If you are a U.S. citizen, resident or green card holder with foreign income, accounts, or assets, failure to disclose this information to the IRS  may result in monetary penalties and criminal prosecution. The IRS has an amnesty program that allows you to come forward with certainty that you will not face criminal prosecution. For qualifying taxpayers, participation in the Offshore Voluntary Disclosure Program (OVDP) may be your best available option.

Program requirements

In order to enter into the OVDP you must not yet have been identified by the U.S. government for reporting noncompliance. In addition, you must:

  • Provide copies of your federal income tax returns and informational returns for the past eight years;
  • Provide amended tax returns for all years covered by the OVDP;
  • File original or amended IRS information returns, including the FBAR;
  • Agree to extend the statute of limitations by two years to give the IRS additional time to assess your tax liabilities and FBAR penalties; and
  • Be timely, accurate, and complete with all the information you provide.

The OVDP may or may not be right for you. This program is not without its problems and before applying you should seek advice from one of our highly experienced international tax attorneys.

Opting Out

You may qualify for far lower penalties outside of the OVDP, but if you opt out you may be subject to criminal prosecution, late fees, and a civil fraud penalty equal to 75% of the amount of your tax underpayment. Within the OVDP, IRS audits have a limited scope and time limits for penalty assessments – this is not the case outside the program. The decision to opt in or out of the OVDP program must be made carefully, with a full understanding of the advantages and disadvantages of both choices.

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