Calvetti Ferguson

IRS Closing Offshore Voluntary Disclosure Program

Earlier this year the IRS announced the closure of the 2014 Offshore Voluntary Disclosure Program (commonly known as “OVDP”). The OVDP is designed to incentivize delinquent taxpayers with potential criminal liability to come forward and present a case to the IRS. Although the taxpayer may still be subject to tax, penalties, and interest, the OVDP is designed to protect taxpayers from criminal prosecution. Many taxpayers associate foreign financial reporting with cash held in offshore bank accounts. While bank accounts might be the most obvious example of a foreign financial asset, the definition also includes a panoply of other financial interests, including stock ownership in a foreign company.

Since its inception, the OVDP has enabled over 56,000 taxpayers to come into compliance. Calvetti Ferguson has assisted taxpayers with these matters and pending compliance issues. Moreover, the process the taxpayers go through is complicated and time consuming. Sometimes it may require coordination with legal counsel to protect taxpayer communications in addition to evaluating the records and accounting for any pending income tax and compliance obligations.

Nevertheless, the IRS announced the program will end. The OVDP program deadline is September 28, 2018, and a complete submission must be postmarked by that date. The IRS has indicated that it will not permit taxpayers to send partial, incomplete or “placeholder” submissions. Depending on the facts and circumstances, it may take us several weeks to assist you with gathering the necessary information for a complete submission. Given these circumstances, now is the time to reach out to your Calvetti Ferguson advisor if you believe you might be subject to the OVDP or if you have questions about how the offshore compliance procedures apply to you.

For more information about this change, you may also visit the IRS Frequently Asked Questions and Answers page here.

Matthew Heberlein, International Tax Senior Associate
Mario Garcia, Tax Partner