Time is running out for taxpayers to disclose offshore financial assets to the IRS. The IRS is ending its Offshore Voluntary Disclosure Program (OVDP). The IRS will officially end the program on September 28th, giving taxpayers a little over four months to come forward with previously undisclosed foreign financial assets.
The OVDP is a voluntary disclosure program specifically designed for taxpayers who could potentially face criminal liability or substantial civil penalties due to a failure to report foreign financial assets and pay the associated taxes. Under current law, U.S. taxpayers have an obligation to report certain offshore assets. OVDP was launched in 2009 and more than 56,000 taxpayers have used one of the programs to comply voluntarily. The IRS reports that the number of taxpayer disclosures under OVDP peaked in 2011 when about 18,000 people came forward, but that number has steadily declined through the years. In 2017, there were only 600 disclosures. The IRS says the drop-in disclosures reflects advance in third-party reporting and increased awareness of U.S. taxpayers of their offshore tax and reporting obligations.
Although the OVDP is ending, the IRS is keeping the Streamlined Filing Compliance Procedure in place in case you are not aware of your filing obligations. The IRS also plans to continue to use tools beside the voluntary disclosure program to combat offshore tax avoidance, including taxpayer education.
If you are unsure of if you need to report foreign income or assets, Polston Tax can help. Call us today at 844-841-9857 or click below to schedule a free consultation.