OVDP Streamlined SubmissionsNews
Posted in on September 19, 2017
Our Maryland Tax Lawyers Offer Insight into the OVDP Streamlined Submissions Process
Do you have undeclared foreign financial accounts? Are you worried the IRS will discover these accounts and take action against you? Don’t fret; you may be eligible for a unique program that can reduce your penalties.
The IRS Offshore Voluntary Disclosure Program (OVDP) offers a Streamlined Process which allows certain U.S.-affiliated taxpayers with undeclared foreign assets to come forward and resolve their failures to comply with reporting obligations in connection with their foreign accounts.
It is important that you understand how OVDP works, what the Streamlined OVDP is, and whether you are eligible for it before you decide how to proceed in connection with your undeclared offshore funds. Thorn Law Group can provide the assistance you need to determine if participation in this program is right for you and will help you explore other options for resolving your concerns regarding possible IRS-imposed penalties stemming from failure to report foreign financial accounts. Contact a Maryland tax lawyer at our firm today to discuss your options.
Understanding the OVDP Streamlined Submission Process
OVDP is a program for people who did not follow the rules for reporting their foreign financial accounts to U.S. tax authorities. In addition to reporting offshore assets and income on tax returns submitted to the IRS, offshore accountholders and those with signature authority on offshore accounts must also file an annual Report of Foreign Bank and Financial Account (FBAR) to the Financial Crimes Enforcement Network (FinCEN) if the aggregate balance in offshore accounts exceeds $10,000 at any time over the course of the year.
Failure to comply with these reporting requirements results in substantial financial penalties if the IRS discovers the failure on its own. With many banks participating in a Swiss Bank Program that allows the banks to avoid criminal penalties for facilitating tax evasion if they turn over account information, an increasing number of accountholders are having their offshore assets discovered and are being hit with large civil penalties. Some accountholders are even at risk of criminal action.
The Offshore Voluntary Disclosure Program allows taxpayers with undeclared foreign accounts to tell the IRS about those accounts voluntarily before they come under investigation in order to minimize penalties. While willful violators who intentionally failed to disclose their foreign accounts can still face substantial financial loss even if they do come forward voluntarily, this is still preferable in many cases to an IRS civil enforcement action. Further, non-willful violators can opt to participate in an OVDP Streamlined Submission Process, which can drastically reduce penalties in comparison to those imposed on willful violators or those who do not participate in OVDP.
Are You Eligible for the OVDP Streamlined Process?
You are eligible for the Streamlined OVDP Process only if you meet certain criteria, such as not already being under IRS investigation. You must not have acted intentionally in your failure to comply with reporting requirements, but rather, the failure must have been the result of negligence or a misunderstanding of your legal obligations.
Provided you meet eligibility criteria, you'll need to submit amended returns and information forms to the IRS, along with submitting FBARs you were previously supposed to file but failed to submit. You will have to pay a penalty equal to five percent of the undeclared offshore accounts and you will also have to pay back taxes and interest. However, this is a substantially lower penalty than you would otherwise face – and, best of all, you will eliminate the possibility of criminal prosecution through OVDP participation.
Contact a Maryland Tax Lawyer at Thorn Law Group to See If OVDP Streamlined Is Right for You
While OVDP Streamlined may be the best option for some taxpayers, there are risks associated with Streamlined Submissions, including the chance the IRS will decide you aren't actually a non-willful violator. It is in your best interest to speak with a Maryland tax lawyer to understand your options before deciding if a Streamlined Submission is right for you. Our firm is here to help. For more information, call Kevin E. Thorn, Managing Partner of Thorn Law Group, today at 240-235-5096.
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