One thing is clear about the massive release of additional documents in the “Panama Papers” scandal yesterday: It’s only a matter of time. There are several US taxpayers identified in yesterday’s information release who should seriously consider their position and immediately file OVDP application to avoid potential criminal exposure for tax evasion. The Offshore Voluntary Disclosure Program or OVDP provides several benefits to US taxpayers who have not fully previously disclosed offshore bank accounts, assets and income to the IRS. One benefit is the reduction in penalties from 50% to 27.5% for many of these accounts, and freedom from a penalty that will not be less than $100,000 for each occurrence. The primary benefit may be a release from criminal prosecution for tax evasion and the likely result of jail time.
The IRS has made it very clear at each step in the process that the OVDP and Streamlined Offshore Procedures are not an amnesty program. There is no amnesty for those who have failed to report offshore bank and investment accounts, assets and income. Many initially flocked to the streamlined program hoping to claim “non-willful” conduct and pay a minimum penalty of 5%. The IRS recently redefined its guidelines for this program, and made it very clear that the vast majority of claims are not going to qualify as “non-willful.” Many of these applications have been flat rejected, while many more have been sent back to the US taxpayer with “questions.” The new questionnaire covers every aspect of a taxpayer’s life: education, financial background, foreign travel, source funding, and a comprehensive description of each foreign account and entity, and the reasoning behind its creation and use.
The Offshore Voluntary Disclosure Program or OVDP provides the safest and least risky path to coming into compliance with FATCA and IRS FBAR disclosure requirements. The experienced international tax attorneys at Allen Barron invite you to contact us for a free and substantive consultation at 866-631-3470. Learn about the protections of the attorney-client privilege and come into compliance with the IRS. Should US taxpayers immediately file OVDP application if they have not come into compliance with IRS offshore reporting requirements? It’s only a matter of time.