What is the Offshore Voluntary Disclosure Program (OVDP)?: Robert Hoffman

What is the Offshore Voluntary Disclosure Program (OVDP)?

As you are probably already aware, the IRS is extremely vigilant when it comes to enforcing compliance with tax reporting requirements. If the IRS suspects a taxpayer of committing or attempting to commit tax evasion by concealing assets in a foreign bank account, the resulting investigation can lead to the imposition of devastating civil penalties, or even referral to the Department of Justice for criminal prosecution.  If you are convicted of tax fraud or other tax crimes, you could be facing tens of thousands of dollars in fines, years of incarceration, and the creation of a lasting criminal record.

When the consequences are this serious, it simply isn’t worth gambling that the IRS will fail to detect or investigate your offshore accounts.  On the contrary, the IRS and DOJ have become increasingly aggressive in recent years, probing major financial institutions in notable tax havens like Switzerland. However, you may be able to avoid criminal liability and safely reenter compliance by participating in a special program called the Offshore Voluntary Disclosure Program or OVDP.

If you’re concerned about your compliance with IRS tax reporting requirements, it is critical that you contact an experienced tax attorney like Robert Hoffman as soon as possible.  Once the IRS initiates an investigation, you will lose your eligibility to participate in the OVDP. To start discussing your situation in a free and completely confidential legal consultation, call The Law Offices of Robert Hoffman at (800) 897-3915 today.

What is the Offshore Voluntary Disclosure Program?

The Offshore Voluntary Disclosure Program (OVDP) is an IRS initiative designed to provide safe avenues for US taxpayers who are in danger of criminal liability due to the failure to report their foreign assets to the IRS.  OVDP generally offers at-risk taxpayers protection from criminal prosecution in federal court, as well as protection from civil penalties for failure to report income, which can eclipse the total amount contained in their foreign accounts.

The IRS has unveiled several versions of the OVDP over the years, sometimes referring to the program as an “Initiative” (OVDI) instead. The current version of the program, which applies to submissions made on or after July 1, 2014, is referred to as the 2014 OVDP. However, taxpayers who made submissions prior to July 1, 2014 can also request consideration under the updated set of 2014 guidelines.

In addition to the standard program, the IRS also offers a modified set of “streamlined” filing procedures.

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Risks of Reporting Foreign Accounts with the Streamlined Procedures

In September of 2012, the IRS announced the implementation of a new filing procedure for US taxpayers who are not residents of the United States.  This new procedure requires taxpayers who failed to report and pay taxes on foreign financial assets to certify that their non-compliance was not due to their own willful conduct.

With regard to certification, be advised that the IRS will require you to “provide specific reasons for your failure to report all income, pay all tax, and submit all required information returns, including FBARs.  If you relied on a professional advisor, [you must] provide the name, address, and telephone number of the advisor and a summary of the advice.  If married taxpayers submitting a joint certification have different reasons, [you must] provide the individual reasons for each spouse separately in the statement of facts.”

If you and your spouse filed a joint return and are concerned about liability, tax attorney Robert Hoffman may be able to help you file for innocent spouse relief.

Non-resident taxpayers wishing to avail themselves of this program must file delinquent information returns and income tax reporting from the past three years, as well as delinquent FBAR (Report of Foreign Bank and Financial Accounts) filings from the past six years. Qualified non-resident filers submissions are expedited.  Furthermore, the IRS does not impose follow-up actions or penalties.

The streamlined procedures were expanded by the IRS to include certain US resident taxpayers in June of 2014.  Eligible resident taxpayers will only face the penalty of 5% of the financial assets that created the compliance concern.

Avoid Criminal Prosecution By Participating in OVDP

Whether you are a taxpayer that holds foreign assets or accounts individually or through an undisclosed foreign financial institution, a voluntary disclosure may enable you to achieve tax compliance while avoiding civil penalities and, generally, criminal tax prosecution for all issues relating to tax noncompliance.  In contrast, taxpayers simply filing amended returns or filing through the streamlined filing procedures do not eliminate the risk of criminal prosecution.

OVDP attorney Robert Hoffman can help you determine whether you are required to report foreign holdings, and whether making a voluntary disclosure would be in your best interest.  To arrange for a free, confidential case evaluation, call Robert right away at (800) 897-3915.