The Internal Revenue Service (IRS) has announced that the Offshore Voluntary Compliance Program (OVDP) will terminate on September 28, 2018 (not the Streamlined Compliance Program).
The purpose of the Offshore Voluntary Disclosure Program is to provide a way for U.S. taxpayers who did not report taxable income in the past to come forward voluntarily and resolve their tax matters.
U.S. Taxpayers Residing Outside The United States
If an American Taxpayer living outside the United States is concerned that his or her failure to report income, pay tax and submit required information returns was due to willful conduct and who wants more assurances that they will not be subject to criminal inability and/or substantial monetary penalties, that taxpayer should consider participating in the Offshore Voluntary Disclosure Program and should consult with their professional tax or legal advisers ASAP, before the IRS ends the OVDP on September 28, 2018.
Taxpayers must meet the applicable non-residency requirements;
- Have failed to report the income from a foreign financial asset and pay tax as required by U.S. law, and may have failed to file an FBAR with respect to a foreign financial account, and such failures resulted from non willful conduct.
- Individual U.S. citizens or lawful permanent residents, or estate of U.S. citizens or lawful permanent residents will meet the applicable non-residency requirement if, in any one or more of the most recent three years for which the U.S. tax return due date (or properly applied for extended due date) has passed, the individual did not have a return due date (or properly applied for extended due date) has passed, the individual did not have a U.S. abode and the individual was physically outside the United states for at least 330 full days.
NOTE: Tax payers residing outside of the United States are not subject to the 5% penalty on unreported foreign assets.
Once the OVDP ends the IRS will be looking for offshore unreported income. The penalties, fines and taxes that can result from unreported foreign income could be life ruining.
This article is posted with permission from U.S. Tax attorney Richard S, Lehman Esq.