IRS Offshore Voluntary Disclosure Program Ending This Month
Okay taxpayers, it’s time to ‘fess up if you have any offshore accounts. I mean personal or business. First of all, let me assure you that it’s not illegal to have offshore accounts. It is however, illegal not to report them to the IRS.
Many people do have offshore accounts for a variety of reasons.
Those who establish offshore accounts are not always attempting to avoid paying taxes nor are they necessarily engaging in any other illegal activities. Very often having an offshore account is simply a method of diversifying political risk by putting liquid savings in sound, well-capitalized institutions where they are treated best. And some people have long-standing accounts that were established before they came to the states.
Non-Willful And Intentional Non-Disclosure
So, for those of you who’ve become American citizens and have had personal accounts in your home country for decades, it’s time to at least let the IRS know about it. If your tax preparer never asked about foreign accounts, you’re not going to be accused of willful non-disclosure.
There is a difference between willful non-disclosure and non-willful. If you are trying to avoid paying taxes, that is willful. If you are unaware of the obligation to report offshore accounts, that is innocent and non-willful non-disclosure. The IRS will not pursue you for criminal activity if you simply come forward.
The reason I’m urging you to reveal any accounts to the IRS now is that their Offshore Voluntary Disclosure Program (OVDP) will end on September 28th. You still have a little time to come into compliance so that the IRS will not think you are trying to hide money.
Program Started In 2014
Since the program began in 2014, the IRS thinks taxpayers have had enough time to come into compliance. You still have time to take advantage of the OVDP before the program closes on September 28th. You don’t want to be pursued by the IRS by not filling out and submitting the appropriate forms. They will come after you thinking you are attempting tax evasion.
However, the IRS has stated that, “The ongoing efforts of the IRS and the Department of Justice to ensure compliance by those with U.S. tax obligations have raised awareness of U.S. tax and information reporting obligations with respect to undisclosed foreign financial assets. Because the circumstances of taxpayers with foreign financial assets vary widely, the IRS will continue offering the following options for addressing previous failures to comply with U.S. tax and information return obligations with respect to those assets:
- IRS-Criminal Investigation Voluntary Disclosure Program;
- Streamlined Filing Compliance Procedures;
- Delinquent FBAR submission procedures; and
- Delinquent international information return submission procedures.
We Can Help
If you are an IRS Allstar client and have forgotten to alert your tax preparer about foreign accounts, by all means call right away. If you are not yet one of our clients but need help with the compliance procedures, call our office today. We’d like to keep you out of IRS trouble.