With the aim of providing an opportunity for taxpayers who wish to make a voluntary disclosure of undisclosed foreign accounts or entities to become compliant, avoid substantial civil penalties and generally eliminate the risk of criminal prosecution, the IRS Amnesty reopened the Offshore Voluntary Disclosure Program (OVDP) in 2012.
Avoid Penalties and Jail Term with OVDP 2012 With the aim of providing an opportunity for taxpayers who wish to make a voluntary disclosure of undisclosed foreign accounts or entities to become compliant, avoid substantial civil penalties and generally eliminate the risk of criminal prosecution, the IRS Amnesty reopened the Offshore Voluntary Disclosure Program (OVDP) in 2012. It applies to those citizens who: ● Voluntarily inform the IRS of their tax violations ● Have the only legal source of income ● Are not under criminal investigation, for tax evasion ● File a correct tax return or cooperate with the IRS ● Make a full payment of the amount due The IRS’s prior such programs were Offshore Voluntary Disclosure Program (2009 OVDP) and Offshore Voluntary Disclosure Initiative (2011 OVDI), both met with great success. It netted around 33,000 nonfilers in its first and second initiatives over the last few years. Though the objective of the IRS Amnesty 2012 is similar to that of its earlier initiatives i.e., to bring taxpayers that have used undisclosed foreign accounts and undisclosed foreign entities to avoid or evade tax into compliance with United States tax laws, it differs in the framework. Here is a look at some of the requirements of OVDP 2012. ● Provide copies of previously filed original (and, if applicable, previously filed amended) federal income tax returns for tax years covered by the voluntary disclosure. ● Provide complete and accurate amended federal income tax returns (for individuals, Form 1040X, or original Form 1040 if delinquent) for all tax years covered by the voluntary disclosure, with applicable schedules detailing the amount and type of previously unreported income from the account or entity. ● Agree to cooperate with IRS offshore enforcement efforts by providing information about offshore financial institutions, offshore service providers, and other facilitators, if requested. ● File complete and accurate original or amended offshore-related information returns or tax years covered by the voluntary disclosure. ● Submit full payment of any Title 26 tax liabilities for the years included in the offshore disclosure period and all taxes, interest, accuracy-related penalties for underpayments related to offshore accounts and entities, and, if applicable, the failure to file and failure to pay penalties. ● Cooperate in the voluntary disclosure process, including providing information on offshore financial accounts, institutions and facilitators, and signing agreements to extend the period of time for assessing Title 26 liabilities and FBAR penalties. Taxpayers must take advantage of the IRS Overseas Voluntary Disclosure Program to effectively avoid prosecution by self-reporting their prior tax violations to the IRS. Read More About: Entity Formation
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