The Internal Revenue Service has announced that it will close its Offshore Voluntary Disclosure Program on Sept. 18, 2018. The program was part of an effort by the IRS to stop offshore tax evasion, by offering U.S. taxpayers not currently under audit or criminal investigation an opportunity to avoid criminal prosecution and a settlement of a variety of civil and criminal penalties in the form of a single miscellaneous offshore penalty. According to the IRS, “while the program has been successful in the past, there has been a significant decline in the number of taxpayers participating as well as an increase in awareness of offshore tax and reporting obligations.” Despite the closure of this program, the IRS says that stopping offshore tax noncompliance and evasion remains a top priority.
This change won’t affect the Streamlined Filing Compliance Procedures, which will remain in effect after the OVDP ends. This program, which began on Sept. 1, 2012, is available to taxpayers certifying that their failure to report foreign financial assets and pay all tax due in respect of those assets didn’t result from willful conduct on their part.
According to the IRS, the streamlined procedures are designed to provide taxpayers in these situations with: “a streamlined procedure for filing amended or delinquent returns, and terms for resolving their tax and penalty procedure for filing amended or delinquent returns, and terms for resolving their tax and penalty obligations.”
It’s possible that the IRS may eventually end this program as well.