Earlier this year, the IRS announced that it had reopened its Offshore Voluntary Disclosure Initiative. However, aside from announcing the program, the IRS had not provided any updated guidance concerning the administration of the reopened program. That changed recently as the IRS finally issued guidance concerning the reopened program. According to the IRS:
The IRS’s prior Offshore Voluntary Disclosure Program (2009 OVDP), and Offshore Voluntary Disclosure Initiative (2011 OVDI), which closed on September 9, 2011, demonstrated the value of a uniform penalty structure for taxpayers who came forward voluntarily and reported their previously undisclosed foreign accounts and assets. These initiatives enabled the IRS to centralize the civil processing of offshore voluntary disclosures and to resolve a very large number of cases without examination. Because the IRS and Department of Justice offshore enforcement efforts are expected to continue raising the risk of detection of taxpayers with undisclosed foreign assets for the foreseeable future, it has been determined that a similar program should be available to taxpayers who wish to voluntarily disclose their offshore accounts and assets to avoid prosecution and limit their exposure to civil penalties but have not yet done so. Unlike the 2009 OVDP and the 2011 OVDI, there is no set deadline for taxpayers to apply. However, the terms of this program could change at any time going forward. For example, the IRS may increase penalties or limit eligibility in the program for all or some taxpayers or defined classes of taxpayers – or decide to end the program entirely at any point. This new program, the Offshore Voluntary Disclosure Program (OVDP) will be available until further notice to taxpayers who come forward and complete certain requirements. The terms of the program will also be offered to taxpayers who made offshore voluntary disclosures after the deadline for the 2011 OVDI.
All U.S. citizens or residents with unreported foreign financial accounts should seek the advice of qualified tax counsel concerning the 2012 Offshore Voluntary Disclosure Program.
Stephen J. Pieklik of the Pittsburgh tax law firm Williams Coulson has succesffuly advised many clients with respect to foreign financial account matters, including the 2009 Offshore Voluntary Disclosure Program, the 2011 Offshore Voluntary Disclosure Initiative, and 2012 Offshore Voluntary Disclosure Program.