How Offshore Voluntary Disclosure Program Helps Taxpayers
Last updated on October 16, 2014
Offshore Voluntary Disclosure Program (OVDP) allows taxpayers that have evaded taxes to get back into tax compliance without facing harsh punishment for it. The IRS initiated OVDP again in 2011 after its 2009 success. Along with Foreign Account Tax Compliance Act (FATCA), the IRS is using OVDP to get taxpayers that have been hiding income in foreign accounts in order to evade taxes to get back into tax compliance.
OVDP helps taxpayers with undisclosed foreign accounts or assets to voluntarily disclose their assets and avoid civil penalties and possible criminal prosecution. The penalties for tax evasion are heavy. Under the program, the penalties are not forgiven, but reduced. The program also assists taxpayers to become certain of the total cost of resolution.
The IRS has been making intense efforts to curb tax evasion. If taxpayers are detected having unaccounted income and/or assets overseas, they run the risk of heavy penalties and possible imprisonment. OVDP provides a simple way to get back into compliance with minimum punishment.
The deadline for the 2011 OVDP is not set. According to the IRS, “Unlike the 2009 OVDP and the 2011 OVDI, there is no set deadline for taxpayers to apply. However, the terms of this program could change at any time going forward. For example, the IRS may increase penalties or limit eligibility in the program for all or some taxpayers or defined classes of taxpayers – or decide to end the program entirely at any point.”
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