On March 13, 2013 the Internal Revenue Service announced that it will end the 2014 Offshore Voluntary Disclosure Program (OVDP) on Sept. 28, 2018. This means that taxpayers have approximately 6 months left if they wish to participate in the program.
The OVDP is a voluntary disclosure program that offers taxpayers an opportunity to report foreign financial assets for prior undisclosed tax years. The disclosure period is defined as the most recent eight tax years for which the return due date has already passed. Nondisclosure by taxpayers means that they may be exposed to potential criminal liability. They are also exposed to substantial civil penalties if the IRS determines that the taxpayer was engaging in willful failure to report foreign financial assets and to pay all taxes due with respect to such assets.
The benefits of participating in the OVDP include minimize the risk of criminal liability. If a taxpayer is accepted in the OVDP and ultimately resolves outstanding issues by way of a closing agreement, the IRS Criminal Investigation division will not recommend criminal prosecution to the Department of Justice for the relevant tax periods up to the date of the disclosure. Another benefit to the OVDP is by entering into agreed-upon terms, the taxpayer can resolve outstanding issues in connection with the additional taxes that are owed and the civil tax penalties that will be due.
Taxpayers should consult with a tax attorney to determine whether the OVDP is the right program for them. If it is determined that this option is not appropriate, taxpayers should consider other alternatives, including Streamlined Filing Compliance Procedures, Delinquent FBAR submission procedures, or Delinquent international information return submission procedures.
For more information on each of these options, visit the IRS website at: https://www.irs.gov/individuals/international-taxpayers/options-available-for-u-s-taxpayers-with-undisclosed-foreign-financial-assets