Offshore Voluntary Disclosure Program (OVDI) | Foreign Bank Account Disclosure (FBAR) | Streamlined Disclosure Program
If you are a U.S. citizen or resident and have bank accounts located in a foreign country, you are required to disclose the account and its balance every year by June 30th to the IRS. Taxpayers who fail to disclose foreign bank accounts to the IRS can face harsh penalties or even tax evasion charged. Over the past several years, the IRS has cracked down hard on undisclosed foreign bank accounts and foreign financial assets. If the IRS determines you have a duty to disclose and has learned that you have failed to disclose, they may assert significant tax penalties against you. While our team of tax attorneys and certified public accountants can argue for penalty abatement on your behalf, it is better to be proactive to avoid these burdensome penalties from accruing on your account.
While it is a natural concern for a taxpayer to come clean with the IRS in fear of undesirable audits and possible criminal penalties, the IRS has instituted a voluntary disclosure program (OVDP) to ease this concern and burden.
We are trained and experienced in determining whether the voluntary disclosure program is right for you. As always, conversations with Dallo Law Group are confidential and privileged. If the voluntary disclosure program is right for you, we can assist in this highly sensitive and technical process.
What is the OVDI?
The Offshore Voluntary Disclosure Initiative (IRS OVDI) is also sometimes referred to as Offshore Voluntary Disclosure Procedure (IRS OVDP). Under this OVDI program, individuals holding undisclosed foreign bank accounts may disclose this information to the IRS and avoid criminal penalties and reduce civil penalties tremendously. In most cases, criminal immunity is granted when delinquent taxes and limited penalties are paid over to the IRS along with financial disclosures. The IRS OVDI has changed tremendously over the years, aiming to help taxpayers. Most recently, the IRS has enacted the IRS OVDI 2014 program which adds significant changes to the structure of the OVDI program. It is essential that you consult with a tax attorney to discuss the program, its features, risks, and alternatives.
What are the penalties for failing to disclose offshore bank accounts?
Offshore bank account penalties are calculated on an annual basis and can often exceed the balance in foreign bank accounts. This penalty is commonly known as the FBAR penalty. In most cases, the annual penalty equals 50% of the highest undisclosed account balance in foreign bank accounts. Furthermore, if the government determines that failure to report offshore bank accounts was willful, the government may seek to impose severe criminal penalties against the taxpayer. Due to the sensitive nature of this area, legal representation is absolutely necessary and our team of highly trained tax attorneys are ready to assist.
Who needs to worry about OVDI?
Generally speaking, if you are an American citizen with dual citizenship, a foreign national holding and American visa, or are an American citizen living abroad, you have a duty to disclose offshore bank accounts to the IRS and are subject to penalties for failing to disclose those assets. Collection and penalties have dramatically increased over the years, so this is not an issue to be taken lightly. Penalties can be devastating on those who fail to voluntarily report or pay taxes. Compliance and help with your disclosures is key in this situation.
As a firm you can trust, Dallo Law Group can help you work through the OVDI / OVDP process and negotiation with the IRS to ensure you do not become a target for penalties in the future. We have helped many clients throughout this lengthy process, and have achieved many favorable results.