This report covers the plan to bring to an end in September the U.S. program known as the Offshore Voluntary Disclosure Program.
On March 13, 2018, the Internal Revenue Service (“IRS”) announced that it will be ending the 2014 Offshore Voluntary Disclosure Program (“OVDP”).1 The program will close on September 28, 2018.
Any U.S. taxpayer with undisclosed foreign financial assets only has a few more months to take part in the 2014 OVDP before the program closes and the opportunity to limit exposure to penalties ends.
The IRS initially launched the OVDP in 2009 as a way for taxpayers with previously undisclosed offshore accounts to contact the IRS and resolve the matter.2 The original OVDP expired in 2009, but the IRS launched an Offshore Voluntary Disclosure Initiative in 2011 and another OVDP in 2012.3 The 2014 OVDP was a modification of the 2012 OVDP, and was in part a response to the implementation of the Foreign Account Tax Compliance Act (FATCA) and the increased success of the IRS and Department of Justice in detecting undisclosed foreign accounts and assets. Unlike previous iterations, the 2014 OVDP did not have a set deadline.
The programs allowed U.S. taxpayers to voluntarily resolve past non-compliance related to unreported foreign financial assets and failure to file information returns with respect to foreign holdings. Taxpayers who took part in one of these programs avoided prosecution and limited their exposure to civil penalties. According to the IRS, more than 56,000 taxpayers have used one of the programs, resulting in the collection of roughly $11.1 billion in back taxes, interest, and penalties.
The Streamlined Filing Compliance Procedures for taxpayers who might not have been aware of their filing obligations is a separate program and is not affected by the end of the 2014 ODVP. However, as with OVDP, this program could be shut down at any time.
1 IR-2018-52: “IRS to end offshore voluntary disclosure program; Taxpayers with undisclosed foreign assets urged to come forward now.”
2 For “Offshore Voluntary Disclosure Program Frequently Asked Questions and Answers 2014,” click here.
3 For coverage of the 2011 OVDI program, see “U.S. IRS Launches New Voluntary Disclosure Program” in Flash International Executive Alert 2011-051 (March 16, 2011), a publication of the KPMG International member firm in the United States. For a copy of this article, please contact your local GMS/People Services professional.
The above information is not intended to be "written advice concerning one or more Federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230 as the content of this document is issued for general informational purposes only.
The information contained in this newsletter was submitted by the KPMG International member firm in United States.
© 2020 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance.
Flash Alert is an Global Mobility Services publication of KPMG LLPs Washington National Tax practice. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.