Americans with offshore tax compliance problems are being advised to apply immediately as the US Internal Revenue Service’s (IRS) Offshore Disclosure Programme (OVDP) is due to close at the end of next month.
All american citizens with a foreign bank account have until September 28 to voluntarily disclose worldwide income, including interest, foreign earnings, wages, dividends and other income.
With the IRS’ Offshore Voluntary Disclosure Programme (OVDP) due to close on 28 September, after a 10 year run, and some people are rushing to get in, as it offers a kind of bulletproof amnesty with a kind of no-questions asked approach.
In the announcement, the IRS encouraged taxpayers who need to disclose non-compliant and unreported foreign accounts and assets to come forward before the September deadline.
Qualifying taxpayers who have unreported foreign accounts can still use the OVDP to come into compliance while avoiding the risk of criminal prosecution and minimizing otherwise applicable civil penalties, but only until that date.
The statute of limitations is six years. Plus, the statute of limitations never expires on tax fraud, so the IRS can pursue the citizen many years later for back taxes, interest and penalties.
For those who failed to report income, thecivil liability to the IRS can include a 20% accuracy-related penalty or a 75% civil fraud penalty.
Filing a false tax return is a felony that can mean up to five years and a fine of up to $250,000.
To effect a successful voluntary disclosure, the taxpayer must provide a complete and truthful disclosure, cooperate with the IRS and pay any tax, interest, and penalties that are due. Also, the disclosure must not relate to illegal-source funds.