The IRS has been aggressively cracking down on offshore investors who are not in compliance with tax rules requiring them to report their accounts and pay taxes on offshore income. The IRS has used a number of different tools, including compelling banks to turn over details about their accountholders in order for the banks to avoid criminal prosecution for facilitating tax evasion.
The IRS has been successful in its crackdown, with an estimated 1,545 taxpayers indicated for criminal violations for offshore tax avoidance since 2009. Many others faced civil penalties, including financial penalties that were sometimes valued at more than the amount of money held offshore.
One of the techniques the IRS has used to try to discover undeclared offshore accounts is to encourage people who own those accounts to come forward and disclose them on their own. To that end, the IRS created a voluntary disclosure program in 2009 that offered reduced penalties and protection from criminal prosecution for eligible offshore investors who came forward to disclose their previously undisclosed accounts.
The voluntary disclosure program has changed over time, including the launch of a new program in 2014. However, the premise of providing taxpayers with a way to come forward, report their offshore accounts, and limit penalties, has remained the same. Now, however, the IRS has indicated it will end its voluntary disclosure program effective September 28.
If you have an undeclared offshore account and are thinking you would like to participate in OVDP before this deadline so you don't have ongoing worries about tax issues hanging over your head, you should make certain to talk with a Boston tax evasion attorney first in order to understand the potential consequences of coming forward. Give us a call today to find out more.
OVDP Program is Ending
The IRS announced very early on that the offshore voluntary disclosure program is coming to an end in September. This early announcement was intended to provide time for those investors who still have undeclared offshore funds to decide that they will come forward and report their accounts.
More than 56,000 taxpayers have already taken part in OVDP, admitting they had undeclared offshore accounts, with their voluntary admission given in exchange for the IRS promising limited penalties. The IRS collected an estimated $11.1 billion in back taxes and penalties from those who came forward. However, fewer people are coming forward today. In 2011, around 18,000 people came forward to report their offshore accounts whereas just 600 came forward in 2017.
If you are considering coming forward to report your own offshore accounts, you should talk with a Boston tax evasion attorney before you move forward. There are risks associated with coming forward, but there are also risks associated with trying to continue to keep your accounts secret – especially since the IRS has indicated it is making a new push to find taxpayers who fail to disclose foreign investments.
You should talk with Kevin Thorn, a Boston tax evasion attorney, as soon as possible to understand your options. An attorney at our firm can guide you through.