The IRS has made clear of the need to report offshore foreign accounts of taxpayers since 2009, with the release of the Offshore Voluntary Disclosure Program. It’s reached the point where the IRS has decided to close the program on September 28, 2018; taxpayers with offshore accounts should take advantage of the program as soon as possible, and certainly by this fall.
Since 2009, more than 56,000 taxpayers have participated in the program. And they have paid over $11 billion in back taxes, interest, and penalties. The number of taxpayers reporting offshore accounts has steadily declined and tapered off last year. The IRS’ investigations show more taxpayers out there that have yet to participate in the program, and owe the IRS debts due to their offshore accounts. Since 2009, the IRS has indicted over 1,500 individuals on criminal charges related to international accounts.
So what’s the procedure for clearing your name with the IRS? We answer the FAQs below.
You must postmark disclosure forms by this date. You cannot file them as partial or incomplete, or use them as a placeholder.
The IRS will continue to enforce compliance via other avenues, including the continuance of conducting investigations into criminal activity in relation to offshore accounts.
The IRS will review these ‘quiet’ disclosures, and they will be subject to civil or criminal penalties accordingly.
FBAR submission procedures will remain available after September 28, as the IRS intends these procedures for those that have failed to report information, but without tax noncompliance.
Fill out FinCEN Form 114. You must file electronically, and it requires several line items to be reported. We recommend consulting your tax professional for guidance tailored to your particular financial situation. They can also tune your filing to the nature of your offshore accounts.