If you have undeclared financial accounts offshore, you have probably heard of the Offshore Voluntary Disclosure Program (OVDP) and you may have considered taking part in the program. Since OVDP started in 2009 to allow people who did not file a Report of Foreign Bank and Financial Account to come forward and report their accounts-- while minimizing penalties-- more than $9.9 billion in taxes, interest, and penalties has been paid by more than 55,800 OVDP participants. May have chosen to participate in the OVDP because penalties can otherwise be draconian for undeclared offshore accounts, with some taxpayers facing penalties of 150 percent of the account balance.
While participation in OVDP can be a good thing, it is not without risk to try to participate, which is why you should talk with a New Jersey tax evasion attorney before deciding on your best course of action. The launch of a new campaign by the IRS Large Business and International Division (LB&I Division) highlights one of the big risks of trying to participate in OVDP.
Campaign Targets OVDP Denials and Withdrawals
The Large Business and International Division has announced a total of 13 new campaigns, with one campaign in particular related to the OVDP program. The campaign will target individuals who applied for OVDP but withdrew, as well as those who applied for pre-clearance but were denied.
According to the campaign's lead executive, there were around 6,000 taxpayers identified who will be targeted by the campaign as of May. More taxpayers are likely to be targeted as people apply for OVDP and are either denied or withdraw from participation before their tax issues are resolved.
For those affected by the campaign, there are three possible treatment streams.
- Those who've already come into compliance won't face any further action
- Those who aren't yet in compliance could receive letters informing them of options and mandating a response.
- Those who are not complaint could be selected for an IRS examination, which will follow the same process as any other IRS examination.
Being selected for an IRS examination is a big deal, as the examination could identify tax compliance problems that result in substantial penalties. The campaign will be focused specifically on individuals who didn't pay required income taxes, rather than simply people who have delinquent information returns but who don't owe back taxes.
Residency isn't a factor in determining if someone will be chosen for an examination or not, and the campaign will exclusively focus on those who previously tried to enter the OVDP program but who failed to do so.
A tax evasion attorney can provide guidance to those considering OVDP about what this campaign could mean for them if they are denied or must withdraw from OVDP. An attorney can also provide assistance to individuals who receive letters from the IRS as well as those who are actually under IRS examination. Contact attorney Kevin Thorn for help as soon as possible so we can assist you in trying to explore options to reduce potential penalties and consequences of an IRS examination.