Our Tax Attorneys Explain the OVDP Streamlined Submissions Process
U.S.- affiliated taxpayers are required to report their offshore accounts and funds to the IRS and to pay taxes on income earned through offshore assets. Taxpayers with aggregate balances of more than $10,000 in foreign accounts are also mandated to file Reports of Foreign Bank and Financial Accounts (FBARs) with the Financial Crimes Enforcement Network (FinCEN) using FinCEN Form 114.
Taxpayers who failed to comply with reporting obligations could find themselves under investigation and faced with substantial penalties, as well as back taxes and interest. In some cases, criminal prosecution could be possible due to failure to declare offshore assets. The IRS has a program in place aimed at encouraging taxpayers to voluntarily come forward and report undeclared offshore funds. There are actually different options available for voluntary disclosure, including OVDP Streamlined Submissions for non-willful violators who did not make required reports of their foreign accounts.
Kevin E. Thorn, Managing Partner of Thorn Law Group, and the tax attorneys at Thorn Law Group can provide assistance to taxpayers who are considering participating in OVDP's Streamlined Submission Process or who are worried that the IRS will discover their undeclared offshore accounts. To find out more about how our firm can help, give Kevin E. Thorn a call today at 202-270-7273.
What is Streamlined Filing for OVDP?
The Offshore Voluntary Disclosure Program is meant to provide taxpayers with undeclared offshore funds the incentive to voluntarily report their offshore accounts by offering reduced penalties. Streamlined OVDP, in particular, is a program for non-willful violators who did not comply with IRS rules for reporting offshore accounts.
A non-willful violator is a person who was negligent or who misunderstood legal obligations and whose failure to file reports of foreign accounts was based on this misunderstanding or carelessness. Willful violators, those who intentionally failed to report offshore accounts for purposes of hiding the existence of those accounts from the IRS, will not be permitted to participate in Streamlined Filing for OVDP.
Those who are eligible for streamlined filing will need to submit FBARs for past years, as well as amended returns to the IRS providing information about their offshore accounts during the years when the accountholder failed to make required reports. Both account owners and those with signature authority on foreign financial accounts have reporting obligations and can participate in OVDP.
In addition to submitting amended returns, taxpayers who participate in Streamlined Filing with OVDP will have to pay back taxes, back interest and a penalty equal to five percent of the balance of undeclared offshore funds held in the accounts during the year(s) when the reports were not made. These penalties are substantially lower than the penalties that are associated with other amnesty programs for willful violators and are substantially lower than penalties imposed if the IRS takes action against offshore accountholders to obtain civil penalties before the taxpayer has come forward.
Taxpayers are eligible for Streamlined OVDP only if they meet certain criteria, including not already being a potential target of an IRS investigation because their foreign financial institution has provided account information to U.S. taxing authorities. There is a risk associated with participating in that the IRS could determine that a taxpayer is, in fact, a willful violator. Before making the decision to participate in Streamlined Filing for OVDP, you should contact Kevin E. Thorn, Managing Partner of Thorn Law Group, for help.
