The IRS has announced it will begin to shut down the 2014 Offshore Voluntary Disclosure Program (OVDP). The program will close on September 28, 2018. Therefore, U.S. taxpayers with undisclosed foreign financial assets have a limited amount of time to use the OVDP before the program ends.
Since 2009, more than 56,000 taxpayers have used one of the IRS disclosure programs. In addition, those taxpayers have paid a total of $11.1 billion in back taxes, interest and penalties. However, the number OVDP disclosures peaked in 2011, when about 18,000 people applied. The number has steadily fallen to only 600 disclosures in 2017. Thus, the programs have enabled thousands of U.S. taxpayers to voluntarily resolve past noncompliance related to unreported foreign financial assets and failure to file foreign information returns.
Offshore Voluntary Disclosure Program
The IRS’s plan to end the current OVDP reflects advances in third-party reporting and U.S. taxpayers’ increased awareness of their tax reporting obligations. However, the IRS will continue to use other tools to combat offshore tax avoidance. These tools include:
- Taxpayer education
- Whistleblower leads
- Civil examinations, and
- Criminal prosecution.
Although the OVDP is ending, some other IRS compliance programs will remain for now. For example, the Streamlined Filing Compliance Procedures will remain available to eligible taxpayers. These procedures are for taxpayers who might not be aware of their filing obligations. In addition, the IRS will also continue the following programs:
- IRS-Criminal Investigation Voluntary Disclosure Program;
- Delinquent FBAR submission procedures; and
- Delinquent international information return submission procedures.