IRS Announces Termination of 2014 Offshore Voluntary Disclosure ProgramBy Paul Bercovici
March 19, 2018
On March 13, 2018, the IRS announced that the 2014 Offshore Voluntary Disclosure Program (“2014 OVDP”) will close on September 28, 2018. The 2014 OVDP is the most current version of the offshore voluntary disclosure programs that first came into existence in 2009.
Under the terms of the 2014 OVDP, U.S. taxpayers who failed to report the existence of certain assets held outside the U.S. on Foreign Bank Account Reports (“FBARs”) and other international information returns and/or failed to report income derived from such assets were permitted to voluntarily come into compliance with U.S. tax laws. This compliance was achieved by filing amended or delinquent U.S. federal income tax returns, paying all federal income tax and interest due on unpaid tax liabilities and paying an “offshore penalty” based on the value of certain foreign financial accounts and assets held offshore. The primary benefits associated with participation in the 2014 OVDP were: (1) it “fixed” the penalty amount payable in connection with past compliance failures and (2) it generally shielded participants from criminal prosecution.
The “streamlined programs” that have been in existence since July 1, 2014 will continue past the above-noted September 28, 2018 termination date. Participants in the “streamlined programs” are generally subject to much less significant offshore penalties than participants in the 2014 OVDP but are required to assert that their failure to report the existence of certain assets held outside of the U.S. and/or to report income derived from such assets was due to “non-willful” conduct. For these purposes, the term “non-willful” generally means conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law.
Taxpayers who are concerned that their past failure to report the existence of certain assets held outside of the U.S. and/or to report income derived from such assets could be deemed “willful” should very seriously consider seeking admission into the 2014 OVDP before the program formally closes on September 28, 2018.
Marks Paneth has successfully worked on offshore disclosure cases since 2009. Our experienced and knowledgeable international tax specialists are available to discuss any concerns you may have regarding past compliance failures involving offshore assets.
Paul Bercovici, Principal, International Tax
Curtis Best, Partner, International Tax
Steven Eliach, Principal-in-Charge of Tax Services
About Paul Bercovici
Paul Bercovici, LL.B., is a Principal at Marks Paneth LLP. Mr. Bercovici specializes in international tax matters including advising US individuals on the income tax implications associated with working and living outside of the United States. He also advises foreign individuals on the income tax implications associated with working and living in the US. Further, he assists foreign and domestic corporations with structuring their US and offshore operations. Immediately prior to joining the firm in 2009,... READ MORE +