The IRS Offshore Voluntary Disclosure Program

In 2009, the Internal Revenue Service (IRS) introduced a plan known as the Offshore Voluntary Disclosure Program (OVDP), which provides certain benefits to taxpayers who have undisclosed offshore accounts or assets. Under the terms of the program, taxpayers are encouraged to disclose foreign accounts and so avoid both criminal and civil prosecution. Applying for the OVDP can be difficult and time-consuming, so if you live in Florida and have questions about your own tax liability, it is important to contact an experienced tax attorney who can address your concerns.

Purpose

The purpose of the OVDP is to provide eligible taxpayers with the opportunity to resolve their tax liability and minimize their chances of facing criminal prosecution. To this end, if a taxpayer truthfully and completely complies with the program’s requirements, the IRS will not recommend criminal prosecution to the Department of Justice (DOJ) for any issue related to tax noncompliance. The taxpayer will also be assessed a much lighter civil penalty.

Pre-Clearance

Before being admitted to the program, applicants must send the following information to the IRS Criminal Investigation Lead Development Center:

• Identifying information, including the applicant’s name, address, date of birth, telephone number, and tax identification number;
• The identifying information of all financial institutions at which undisclosed assets were held, including complete names, addresses, and telephone numbers;
• The identifying information of all foreign and domestic entities, such as trusts, foundations, and corporations through with the undisclosed assets were held; and
• Executed power of attorney forms.

If a couple is filing taxes jointly, they should both request pre-clearance. If approved, the applicant then has 45 days from the date of notification to make a voluntary disclosure using Form 14457 and Form 14454. However, just because a taxpayer is pre-cleared, does not mean that he or she will automatically be accepted into the OVDP. After reviewing the submitted forms, the IRS will notify the applicant by fax whether he or she has been accepted or declined. If accepted, the applicant must finally complete and submit the full voluntary disclosure package.

Penalties

Those who fail to voluntarily disclose their offshore income or assets could be required to pay thousands of dollars worth of fines and may also face criminal charges of:

• Tax evasion;
• Filing a false return;
• Failing to file an income tax return;
• Conspiracy to defraud the government; and
• Conspiracy to commit a tax offense or to defraud the United States.

Those who are convicted of these charges face serious penalties, including a prison sentence of up to ten years and fines of up to $500,000, so if you are concerned about your own offshore assets, it is critical to speak with an experienced tax attorney who can explain your legal options, which may include applying for the OVDP.

Call us Today to Speak With an Experienced Florida Tax Attorney

If you live in Daytona Beach, Jacksonville, Miami, or Orlando and own offshore assets, please contact Ronald Cutler, P.A. by calling 386-788-4480 and we’ll help you schedule a one-on-one case evaluation with an experienced Florida tax attorney who can help explain your legal options.

Resources:

irs.gov/uac/how-to-make-an-offshore-voluntary-disclosure

irs.gov/uac/2012-offshore-voluntary-disclosure-program