Since the first Offshore Voluntary Disclosure Program (OVDP) was enacted in 2009, over $7 billion has been collected from more than 50,000 disclosures. The IRS is very proud of this, of course, because it means they’ve been able to recover unpaid taxes without the costs of detailed investigation and litigation. Thanks to its popularity and continued interest, the IRS continue to keep the program open. If you have considered voluntarily disclosing information about an offshore account, meeting with a tax law attorney can help you determine how to proceed.
What is OVDP?
The Offshore Voluntary Disclosure Program allows someone who has kept an undisclosed offshore account to disclose that account without legal ramifications. Whether a taxpayer willingly or knowingly hid money in an offshore account isn’t at question, especially since the IRS knows that sometimes an offshore account is the result of a scam on an unknowing taxpayer. Regardless, it is a legal issue and there are tax implications.
What Does It Entail?
An OVDP will require that you file eight years of amended tax returns. You will then owe the government any taxes found unpaid during those eight years, plus interest and a penalty of 27.5%. It can seem like a lot, but it’s better than jail time.
Who Should Apply?
If an offshore account has been keeping you up at night, you may want to consider an OVDP. The IRS is not only responsible for collecting taxes, but also for investigating fraudulent returns and loopholes. They can pursue these matters in court. By offering OVDP, they are effectively offering a workaround for those who fear jail time if discovered—even if their participation was unintentional.
OVDP is not the right program for every taxpayer. Just like the IRS has various forms for different situations, they also have different programs. A trustworthy tax law attorney can help steer you towards the right program for you and the IRS, helping you settle your tax burden. Domestic Tax Evasion Amnesty and Foreign Tax Evasion Amnesty programs are available and may be better suited for your situation.
A knowledgeable tax relief law firm will help you navigate the murky waters of tax law. Using their in depth knowledge of the tax code, a tax law attorney will help you deal with the IRS through a stressful time. They can help you better understand OVDP and counsel you through the process.
Some tax relief law firms specialize in OVDP and are especially suited to help taxpayers, even if they are living abroad. They understand the stress and anxiety that can result from dealing with the IRS and focus on creating a judgment-free zone to help their clients through a difficult time. As always, the best way to understand your options when it comes to OVDP is to make an appointment for a consultation with a tax law attorney. As with any legal issue, it is best to deal with tax issues as soon as possible.