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No More Hide N’ Seek For Taxpayers’ Overseas Assets



IRS Is Ending Its Offshore Voluntary Disclosure Program

The IRS is ending the Offshore Voluntary Disclosure Program (OVDP) this September 28th. This program has given U.S. taxpayers an opportunity to come forward with ‘previously undisclosed foreign income, accounts or assets with the promise and certainty that they will not face criminal prosecution.

Since the program’s inception in 2009, over 56,000 US taxpayers have paid over $11.1 billion in back taxes, interest, and penalties through the OVDP, but the number of participants has steadily declined over the past few years – from 18,000 in 2011 down to only 600 in 2017.

What Happens When The OVDP Door Closes…

The answer to the question of what happens once the OVDP door closes can be summed up in one word: Prosecution. The IRS is known to be very aggressive in its pursuit of offshore accounts. It has also been very good over the years at publicizing both the requirement to report income and foreign assets and the availability of the OVDP.

With the ending of the grace period the IRS has made possible, once the September 28th deadline arrives, it will be difficult for taxpayers to argue that their failure to comply with reporting obligations was unintentional. If they are found out, the behavior will go down as criminal.

The High Price Of Getting Caught

For willful violations, the Foreign Bank Account Report (FBAR) penalty is the greater of $129,210 (adjusted for inflation) or 50 percent of the high balance in the account(s) at the time of the violation. For each year that an FBAR is not filed, the penalty may be assessed again, for up to six years. This is the case even if no taxes were due on those accounts.

Criminal penalties for FBAR noncompliance include fines of up to $500,000 and up to 10 years in prison. However, the IRS can adjust the penalties up or down depending on a variety of circumstances.

What can I say? Eventually, it gets old trying to hide assets and income from the IRS. If a taxpayer has the money, it makes more sense to pay what is owed than chance getting caught and paying so much more. But, then again, I suppose the chase is part of the thrill for some people!

If you are an otherwise law-abiding taxpayer who for whatever reason have failed to file or pay your taxes, give our offices a call. We work with the IRS on behalf of our clients and typically bring IRS troubles to an end along with a great sense of relief for our clients.

Have questions? Contact Barry Fowler.

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Barry Fowler is licensed to represent taxpayers before the Internal Revenue Service (IRS) and is a longstanding member of several tax industry professional organizations including the National Association of Enrolled Agents (NAEA), National Association of Tax Preparers (NATP), Texas Society of Enrolled Agents (TSEA), and the American Society of Tax Problem Solvers (ASTPS). With experience in the tax and finance industry spanning over twenty years, Fowler’s expertise includes tax resolution, personal financial planning, tax return preparation, financial statements, and general ledger bookkeeping. He has been instrumental in helping hundreds of people resolve complex tax issues with the IRS.