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OVDP Closed in 2018 – 5 Important Facts About OVDP Ending
OVDP is the traditional Offshore Voluntary Disclosure Program. OVDP (formerly OVDI) has been in existence since 2009, and the IRS has accumulated more than $9 billion of money from taxpayers who have entered the program in order to safely get into compliance.
5 Important Facts About OVDP Ending
September 28, 2018 is the End Date
The OVDP ‘Program’ terminates on September 28, 2018. By that date, you must have at least submitted Phase 1 of the Offshore Voluntary Disclosure process. That does not mean just the preclearance letter, but rather the first phase of documentation, which typically includes certain designated forms such as a 14454 and 14457. Simply submitting a preclearance letter by the date above would presumably not be sufficient to enter OVDP.
The IRS Is Behind on Issuing Preclearance Approval/Denial
Since the IRS will be ending OVDP, it would presume that the program has dropped off of the IRS priority list. The reason this is so important, is because previously in years past, the IRS would respond to all preclearance requests within 30 days.
As of lately, the IRS is taking upwards of 60 to 90 days to respond to preclearance letter – sometimes even longer. Therefore, if you are hoping to receive preclearance notification prior to submitting phase 1 of OVDP, it is important to consider submitting a preclearance letter sooner as opposed to later, since time is short.
International Tax is a MAJOR Enforcement Priority
Some inexperienced attorneys are mistaking the fact that because the IRS is ending OVDP, that somehow this means the IRS is not focusing or prioritizing offshore foreign reporting, but this is dangerously incorrect.
Rather, the opposite is happening. In the recent year, the IRS has developed many different tax enforcement groups and a large number of them focus on international tax enforcement.
In addition, if you review the Taxpayer Advocates recent summary of how the IRS has been operating, including how penalties are being issued, the penalties issued for unreported trusts and foreign accounts/business ownership has increased significantly in the past year alone.
In other words, the IRS is still making international tax enforcement a major priority.
The IRS No Longer Needs You To “Voluntary Disclose”
In years past, the IRS needed individuals and businesses to come forward and disclose their previously unreported or undeclared foreign income, assets, investments, or accounts so that the IRS to learn more about offshore tax haven processes.
Within the last five years, and the introduction of FATCA (Foreign Account Tax Compliance Act), more than 300,000 foreign financial institutions and more than 110 foreign countries worldwide have entered into that agreements with the IRS (noting, that this is nearly double the number of countries that have entered into income tax treaties with the US).
Therefore, with more than 300,000 foreign financial institutions around the globe, proactively reporting information to the IRS and US government, the IRS simply does not need to rely upon you and your voluntary disclosure to know you have unreported accounts or other assets/income.
Thus, since the IRS no longer really needs you to come forward out of the shadows and disclose your information to the IRS, they are removing the carrot and stick that was OVDP.
Willful Applicants Can Not “Go Streamlined”
If you were willful, you have no other option for getting into compliance. You absolutely, 100% cannot go Streamlined. There’s some unscrupulous attorneys out there representing to the public that they would never take a person OVDP, because that presumes willful.
What these inexperienced attorneys do not understand (and inexperience comes in all ages) is that if you were even the slightest bit willful and submit to the streamlined program (an alternative to OVDP reserved solely for individuals who were not willful), you can potentially be facing criminal tax charges.
About Golding & Golding, A PLC
We have successfully represented clients in more than 1,000 streamlined and voluntary disclosure submissions nationwide and in over 70-different countries.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe.