Is OVDP Right For You?Articles/News, Featured, Offshore Account Update
Posted on July 6, 2014 | Share
The IRS Offshore Voluntary Disclosure Program (OVDP) allows taxpayers the opportunity to come forward and disclose offshore accounts that they may not have previously reported to the Internal Revenue Service as required. Those who come forward may avoid criminal prosecution and avoid the harsh penalties that they could otherwise face if the government discovers the account before a disclosure is made.
While OVDP can be a great option for many individuals who are concerned about increased government efforts to find offshore accounts and penalize accountholders, it is important to make sure that you are eligible to participate and that you are participating in the portion participation of the OVDP that is right for you. A Washington DC IRS voluntary disclosure lawyer should be consulted before you move forward on any type of voluntary disclosure with the Internal Revenue Service so you can ensure you are making the smart choice to minimize the costs of coming forward.
OVDP can help you to avoid criminal prosecution for one of several potential crimes, including willful failure to file an FBAR, filing a false tax return or even tax evasion. Failure to disclose your offshore assets or report income they produced on your income tax return could result in charges of Filing a false tax return, submitting false documents to the government or tax evasion. Conviction of any one of these charges can result in jail time.
Further, the civil penalties can be very high if you failed to file a Report of Foreign Bank and Financial Accounts (FBAR). You could face civil penalties as high as the greater of $100,000 or 50 percent of the balance of the unreported account if your failure to report was willful.
The IRS OVDP continues the U.S. Treasury’s longstanding policy of not prosecuting people for offenses who voluntarily report their actions before the government learns of the wrongdoing. If you willfully failed to file an FBAR to report your offshore accounts or you willfully failed to report income from a foreign account and you believe the government may be able to prove it, then OVDP may be the best option for you. As more and more banks provide information to the U.S. government, it is more likely the IRS will be able to prove your failure to report an offshore account or foreign income.
If you simply misunderstood or were not aware of the requirement to report foreign accounts, then there may be benefits to OVDP. The penalty range for taxpayers who acted non-willfully depends upon the specific circumstances. However, the penalties will be increasing for taxpayers with accounts are certain banks. To avoid these steep penalties, you will need to submit a letter seeking clearance to enter the OVDP by August 4, 2014.
A Washington DC IRS voluntary disclosure lawyer should be consulted for assistance in deciding whether to participate in OVDP. Your Thorn Law Group attorney can guide you through the process, and assist you in coming into and staying in compliance.