Big news in the world of expat taxes: the IRS just announced that the Offshore Voluntary Disclosure Program now has an end date: September 28, 2018. Anyone who has not come forward to voluntarily disclose a willful failure to report foreign assets has only a few months left to do so. What does this mean for expats specifically? Below, we’ve outlined what you need to know.
What is the Offshore Voluntary Disclosure Program (OVDP)?
Started in 2009, the OVDP is a protection from prosecution put in place for taxpayers who have been intentionally hiding money overseas. While they are saved from criminal prosecution, the penalties levied against those who utilize this program can be quite high.
Since its inception, over 56,000 taxpayers have come forward with their assets, paying over $11 billion in back taxes, interest, and penalties. The IRS intends for taxpayers to have time to disclose their assets as the program ramps down. In 2011, 18,000 taxpayers used the OVDP to disclose their assets, and that number has been on the decline ever since. In 2017, only 600 taxpayers used this program to disclose.
Though the IRS is closing this program, they note that seeking out and prosecuting tax noncompliance will continue to be one of their main concerns.
What About the Streamlined Filing Procedures?
Fortunately, there’s no current news of an end to the Streamlined Filing Procedures. However, the end to the OVDP signals that the Streamlined Filing Procedures may not be open forever. The best option for expats is to become compliant as soon as possible in order to pay as little in penalties and interest as possible.
The Streamlined Filing Procedures are available to taxpayers who did not know they had a filing obligation, and the related penalties are significantly less than the amounts imposed by the OVDP. To utilize the Streamlined Filing Procedures, expats must file three years of delinquent tax returns and six years of delinquent Foreign Bank Account Reports (FBARs).
Have Questions About Getting Caught Up on Your Taxes?
If you are behind on your expat taxes and want to know the best way to get caught up, contact our expat-experts today who can help you become compliant.