As the IRS continues to crack down on foreign asset and income reporting, it is more important than ever to be compliant with your filing and reporting obligations. If you haven’t been compliant in the past, the IRS has created programs for taxpayers to become compliant – the Offshore Voluntary Disclosure Program (OVDP) , Streamlined Filing Compliance Procedures (Streamlined Program), and Late Informational Reporting Procedures.
For the most egregious and willful violators, the OVDP offers a chance to become compliant with a heavy, but defined, penalty structure and immunity from criminal prosecution. It is very important the terms and reporting of the program are followed exactly. Otherwise, an invalid submission could subject you to all the negative consequences you sought to avoid.
If you made an honest mistake in failing to report, or were “non-willful,” you may have other options for compliance under the Streamlined Program and / or late informational reporting. In these situations, the IRS requires less reporting and much less in penalties; in some cases there may not even be any penalties. However, in order to qualify, a thorough analysis of the facts and circumstances is required to determine if you meet the requirements for the various programs. Entering the wrong program could potentially subject you to significant penalties and criminal prosecution.
This is a unique time for taxpayers because IRS enforcement is strengthening and these programs will likely only be available for a limited time. Additionally, you are found to have undisclosed assets or are audited before entering a formal program, you are no longer eligible to enter a program and are subject to the full range of potential penalties related to the non-compliance.
At Hone Maxwell LLP we have experience with international reporting and compliance and all IRS formal offshore disclosure programs. Our experience allows us to not only ensure a smooth process through the programs, but also to review the underlying filings to ensure they are accurate. The representation we provide is comprehensive and complete to ensure compliance now and down the road.