IRS Ending Offshore Voluntary Disclosure Program

The IRS has announced that it will begin to reduce and eventually eliminate the 2014 Offshore Voluntary Disclosure Program on 28 September 2018. See IR-2018-52, March 13, 2018. The IRS urged U.S. taxpayers with undisclosed foreign financial assets to come forward now before the program closes.

The current program that began in 2014 is a modified version of a 2012 program, which followed earlier iterations offered in 2011 and 2009. The goal was to combat evasion of taxes by concealing assets overseas and was coordinated with various tools the IRS developed to identify foreign assets and tax evasion, such as FATCA, other new reporting programs, and information-sharing agreements with many foreign tax authorities. Taxpayers who came forward voluntarily avoided criminal prosecution and paid reduced civil penalties. Since 2009, over 56,000 taxpayers have used the program, voluntarily paying over $11.1 billion in back taxes, interest, and penalties. 

Disclosures peaked in 2011 and have steadily declined since. The IRS is now satisfied that it has adequate tools to find and address tax evaders and does not need the “carrot” of the voluntary disclosure program. It believes that the closing date of 28 September 2018, will give any taxpayers still wishing to take advantage of the program plenty of time to do so.

How This Will Impact Mobility

Worldwide ERC® members with overseas employees will want to remind them of their reporting and filing responsibilities and advise them that this program to remedy any past transgressions will expire soon.

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