The IRS ended the Offshore Voluntary Disclosure Program (OVDP) on September 28, 2018. However, not every actually needs OVDP to clear up past mistakes. Sometimes there are better ways to deal with unreported overseas accounts and income. Yet, there still remains a path open for those worried about criminal exposure.
Absolutely not. The majority of our disclosure clients are eligible for a Streamlined Disclosure, which comes with either a 5% penalty for US-based clients and a 0% offshore penalty for those who live abroad. Oftentimes, we find that due to the nature of the earnings abroad, even a Streamlined Disclosure isn't required.
Because of the cost and complexity we always strive to point our clients to a less-intrusive disclosure, if at all possible.
No. If you've paid taxes on unreported accounts, you may not have to enter into the any full blown disclosure program. We may just need to submit delinquent FBAR reports (or other missing forms).
Based on statistics, probably not. There are only about 3,000 criminal indictments a year coming from the Department of Justice for tax-related crimes. This number is a little inflated, as tax evasion charges are often tacked on to other charges (think Al Capone).
But the tax evasion charge can be easier to prove, and accomplish the goal of the government: put the accused in jail. If you are truly concerned about criminal prosections a generic Voluntary Disclosure remains open. The downside is that there is no standard pre-determined penalty schedule. Each penalty is decided one case at a time. The good news is that we are very familiar with these types of audits and have been very succesful in reducing penalties.
From our experience, the government has created a near-perfect environment of fear to encourage compliance. Those with little risk of criminal charges often overestimate their likelihood of criminal investigation. However, those who do have exposure often underestimate their chances of an indictment.
Possible criminal charges related to tax returns include tax evasion, filing a false return, and failure to file an income tax return. Willfully failing to file an FBAR and willfully filing a false FBAR are both violations that are subject to criminal penalties.
A person convicted of tax evasion is subject to a prison term of up to five years and a fine of up to $250,000. Filing a false return subjects a person to a prison term of up to three years and a fine of up to $250,000. A person who fails to file a tax return is subject to a prison term of up to one year and a fine of up to $100,000. Failing to file an FBAR subjects a person to a prison term of up to ten years and criminal penalties of up to $500,000.
Civil penalties and fines are the true threat that most taxpayers face. These are some potential penalties:
It can take quite some time if a full voluntary disclosure is involved. There is a monstrous amount of work to be done to file, and then the IRS also has a monstrous amount of work to do to review it. We suspect this is why the IRS came out with the Streamlined Programs.
The most important factor in determining if you can use the streamlined program is answering this question: Did you willfully not file an FBAR form or intentionally take overt steps to learn about the FBAR? If you did not do either one of these, even if you were perhaps negligent, you likely still qualify. Before assuming you do or don't quality, we strongly urge you to seek a legal opinion from us, because the benefits of the Streamlined program are huge.
It is our job to prepare a submission that is as rock-solid and audit-proof as possible. If you'd like to schedule a confidential, complimentary consultation to find out the best option for you, contact us. Call us at 888-727-8796 or firstname.lastname@example.org.
We invite you to review success stories and case studies of clients of ours.