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Posted on September 19, 2017 | Share
The OVDP Streamlined Process Explained by Our New Jersey Tax Attorneys
The IRS Offshore Voluntary Disclosure Program was created in 2009 with the goal of encouraging taxpayers to voluntarily disclose their failures to follow IRS rules and regulations. The initial 2009 OVDP has ended, but other Offshore Voluntary Disclosure Programs have taken the place of the first program, with the last major change happening in 2014.
The Offshore Voluntary Disclosure Program provides a Streamlined Submission Process for certain taxpayers to correct compliance failures with mandated reporting of offshore accounts. If taxpayers use the OVDP Streamlined Submission Process and are found eligible, they can limit penalties associated with failure to disclosure investments in offshore assets.
That being said, attempting to participate in OVDP on your own, without full knowledge of the process, can have financial risks. A New Jersey tax attorney at Thorn Law Group can explain OVDP and how Streamlined Submissions work. We also provide assistance with submitting forms to the IRS for OVDP participation if this is the right course of action for you. Contact Managing Partner Kevin E. Thorn for assistance in evaluating your unique circumstances so we can help you make the best decision on how to report your offshore accounts.
Understanding OVDP Streamlined Submissions
Taxpayers who are affiliated with the United States not only have to declare offshore accounts and income from foreign assets to the IRS, but also must file an annual Report of Foreign Bank and Financial Account (FBAR) with the Financial Crimes Enforcement Network (FinCEN) in any year when they own foreign accounts with an aggregate (combined) balance of more than $10,000. Those who have signature authorities on one or more accounts with a combined balance of more than $10,000 also have to file FBARs and report and pay taxes on offshore investments.
Not complying with reporting requirements triggers IRS penalties, including large fines that sometimes exceed account balances, as well as the possibility of criminal charges. OVDP provides an opportunity to come forward, admit the past failure to comply with reporting rules and receive lesser penalties.
When you participate in Streamlined OVDP, you won't have to worry about criminal prosecution or about the IRS coming after you in a civil enforcement action that results in the loss of huge sums of money. Instead, you can submit amended returns and FBARs for prior years. Provided you are eligible for participation in OVDP – which means, among other things, that you must not already be under investigation – your penalties will be limited.
When filing for Streamlined OVDP, versus traditional OVDP, you also must prove you are a non-willful violator. That means you must attest, under penalty of perjury, that it was just negligence or a misunderstanding of the rules that resulted in the failure to comply with IRS requirements to report your offshore funds.
Contact Thorn Law Group for Assistance With Filing OVDP Streamlined Submissions
If you're allowed to make a Streamlined OVDP Submission, you must pay back taxes and interest on undeclared offshore funds and you must pay a five percent penalty, calculated based on account value at year's end. This is less than the penalty for willful violators and much less than the penalty for those who don't participate in OVDP at all. To speak with a New Jersey tax attorney today, call Managing Partner Kevin E. Thorn at 201-355-8202 to find out if participation in the OVDP Streamlined Process is right for you.