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Frequently Asked Questions About The IRS Offshore Voluntary Disclosure Program (OVDP) — Part 1

If you are a taxpayer with undisclosed foreign accounts or offshore bank accounts, you need to take advantage of the Internal Revenue Services' current Offshore Voluntary Disclosure Program (OVDP). The OVDP may be your last opportunity to get compliant and resolve your IRS tax problems without being criminally prosecuted. Call an experienced tax attorney from Bucci Law Offices, located in Fort Lauderdale and Miami.

With each passing day, you risk a greater likelihood that the IRS will detect your undisclosed offshore accounts, especially given the wealth of foreign account information released to the IRS, the increased cooperation of foreign governments and the expansion of IRS's resources to enforce compliance. The IRS is getting wiser, gathering information each and every day, and this Offshore Voluntary Disclosure Program may be the last opportunity for taxpayers to resolve unreported foreign income, bank accounts and foreign asset issues, without criminal prosecution. The IRS will take into consideration whether or not you came forward to make voluntary disclosure. However, once the IRS has commenced an investigation, a taxpayer cannot enter into a Voluntary Disclosure Program.

Failing to disclose your foreign banks accounts is a crime punishable by jail and harsh penalties, so it may be in your best interest to voluntarily report your offshore accounts to the IRS. The IRS, with the cooperation of foreign banks and governments, has been increasingly conducting more international and offshore tax audits to actively seek out the identity of those with unreported foreign accounts, especially as this information is becoming more easily available under tax treaties and with whistleblower rewards, as well as the offshore voluntary disclosure programs. The timing of your voluntary disclosure is critical to determining your ability to participate, because it is a key factor considered by IRS when determining whether to exact criminal punishment and/or penalties.

It is very important that, if you have undisclosed offshore accounts or foreign assets, you act before the IRS finds you. Once the IRS has discovered your account, you will be ineligible to participate in the current Offshore Voluntary Disclosure Program.

Can The IRS Offshore Voluntary Disclosure Program Help You?

Are you at risk of going to jail for not disclosing your foreign bank accounts? Consider the following:

  • Do you have foreign accounts or offshore bank accounts?
  • Are you required to file the Report of Foreign Bank and Financial Accounts ("FBAR")? Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (the current FBAR form). FinCEN Form 114 supersedes TD F 90-22.1 (the FBAR form that was used prior to July 29, 2013) and must be filed electronically.
  • Have you timely filed the required Report of Foreign Bank and Financial Accounts ("FBAR") so that it was received by June 30? Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (the current FBAR form). FinCEN Form 114 supersedes TD F 90-22.1 (the FBAR form that was used prior to July 29, 2013) and is only available online.
  • Do you have undisclosed foreign assets?
  • Are these Foreign Financial Assets that need to be disclosed on to the IRS on Form 8938, Statement of Specified Foreign Financial Assets, which is filed with an income tax return?
  • Have you neglected to properly answer whether or not you have foreign accounts or offshore accounts on your tax returns?
  • Do you have unreported income from foreign accounts or assets?

If you answered "Yes" to any of these questions, then you should act immediately and seek the assistance of an experienced tax attorney with expertise in the IRS Offshore Voluntary Disclosure Program. The IRS has a civil penalty framework for taxpayers with unreported offshore accounts, which reduces the risk of criminal prosecution and/or penalties. Taxpayers should take advantage of the reduced civil penalties and resolve their offshore tax issues more favorably than if discovered by the IRS. Under the OVDP program, taxpayers who disclose previously undisclosed foreign accounts and comply with the terms of the program may be able to avoid criminal prosecution.