The Deadline for the U.S. Offshore Voluntary Disclosure Program Is Quickly Approaching
American citizens with offshore assets are running out of time to participate in the U.S. Offshore Voluntary Disclosure Program (ODVP). The IRS announced several months ago that it will be closing this program on September 28. The end of the program will require some adjustments in tax planning for those who have offshore assets, making it crucial that those who are applicable pay key attention.
A Quick Review of ODVP History
The IRS (Internal Revenue Service) originally launched the ODVP back in 2009 to encourage U.S. citizens to be compliant when reporting their foreign assets. It was essentially designed to be a tax amnesty program that let taxpayers avoid criminal prosecution by giving them another chance to come forward and report any offshore accounts in foreign markets. That original program ended on October 15, 2009 with 15,000 or so taxpayers using it.
When the program first ended, the IRS added filing requirements into the Foreign Account Tax Compliance Act (FATCA). Those who did not file an FBAR or comply with FATCA could lead to criminal and/or civil penalties. After two years, the IRS announced an additional amnesty program in 2011 called the 2011 Offshore Voluntary Disclosure Initiative. The program was a great success. In 2011, around 18,000 taxpayers participated and by early 2012, the combined programs had collected about $4.4 billion. Modifications to the program arrived again in 2014, but indicated that they may end the program at any time.
Ending the Program
The announcement from the IRS that the voluntary disclosure program would end came in March 2018, giving taxpayers about half a year to declare their undisclosed offshore accounts. According to the IRS, the program has allowed taxpayers to pay $11.1 billion in taxes, combined with penalties and interest. The IRS decided to end the program since taxpayers had many years to take advantage of it. They also felt that giving six months of warning was more than enough time for high net worth individuals to easily comply.
If You Miss the Deadline
Although the simplest method of dealing with previously undisclosed offshore assets is participating in the voluntary disclosure program, there are still some options. Taxpayers can still follow the Streamlined Filing Compliance Procedures, which are designed for those who did not realize their filing obligations. There is still the option of following the traditional delinquent international information return procedures and the delinquent FBAR procedures.
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