Offshore Voluntary Disclosure Program Ending Soon
The IRS just announced they will be shutting down the Offshore Voluntary Disclosure Program (OVDP) effective September 28, 2018.
If this program is unfamiliar to you, here is the basic premise: A little over ten years ago, the IRS wanted to create an incentive for U.S. taxpayers with offshore assets, income or accounts to come forward and claim these holdings. This program would guarantee those that claimed these assets, that they wouldn't face criminal charges. In 2009 the IRS created OVDP as the answer for this.
Tens of thousands of taxpayers have brought these undisclosed assets to the IRS; since the start of the program, over $11.1 billion in back taxes, interest and penalties have been paid through the OVDP. However, the bulk of these claims were made in the first couple of years of the program. Because of this, and the fact that taxpayers have had several years to take advantage of the program, they decided to end the OVDP this fall.
The IRS is known for aggressively investigating offshore holdings, and the impending end of the OVDP should serve as an alarm for any U.S. taxpayer with holdings offshore that have not been claimed on their taxes to date. You might be wondering what the benefit is for someone to come forward and claim these holdings now, instead of waiting until a later date.
Even though there are still taxes, fees and penalties that will be assessed on these holdings, you can avoid major fines for FBAR noncompliance between now and the September 2018 deadline. CPA Practice Adviser explains that "for willful violations, the FBAR penalty is the greater of $129,210 (adjusted for inflation) or 50 percent of the high balance in the account(s) at the time of the violation. For each year that an FBAR is not filed, the penalty may be assessed again, for up to six years. This is the case even if no taxes were due on those accounts. Criminal penalties for FBAR noncompliance include fines of up to $500,000 and up to 10 years in prison. However, these punishments can be adjusted up or down depending on a variety of circumstances" (click to read more from their article about the OVDP ending).
Archer Tax Group is experienced with evaluating FBAR compliance and helping clients file the necessary forms to become compliant. If you have unclaimed offshore holdings or more than $10,000 in crypto currency held on foreign exchanges such as Binance or Kucoin, contact us. We can help you create a tax plan, become compliant, and take advantage of the last few months of the Offshore Voluntary Disclosure Program.