4 Benefits of Participating in the IRS Voluntary Disclosure Program

For as connected as our world has become, it is still possible for one hand (i.e. the IRS) not to know what another hand (i.e. your offshore account) is doing. However, this scenario is becoming less and less common, particularly since the enactment of the Foreign Account Tax Compliance Act (FATCA) and the signing of numerous intragovernmental agreements between the United States and other countries.

To be clear, offshore accounts are still legal and are still a viable option for wealth and asset management in the U.S. However, having an offshore account with assets of over $10,000 that have not been disclosed to the IRS is a problem. This is partly because those intragovernmental agreements and FATCA require foreign banks to disclose potentially non-compliant accounts owned by U.S. taxpayers. Under the IRS Offshore Voluntary Disclosure Program, however, if you own one of these accounts, you can come clean to the IRS in exchange for mitigation of potential penalties for not having disclosed the account in the first place. If you’re still on the fence, here are some benefits to taking the Offshore Voluntary Disclosure Program plunge.

1) Avoid criminal prosecution. The value of this benefit cannot be overstated. Not to mention, you will no longer be filing tax returns with false information about your overseas accounts, which further reduces your liability.

2) Penalty Mitigation: The IRS Offshore Voluntary Disclosure Program (OVDP) is the continuation of a 2009 pilot program to lure U.S. taxpayers into disclosure with the promise of reduced penalties, and it has been a resounding success. In addition to paying lower overall taxes on the offshore funds, these taxpayers become compliant with the IRS and in general, eliminate the risk of criminal prosecution for tax evasion.

3) It’s not as expensive now as it will be later. The stick to the carrot in this program is that to come into compliance, the U.S. taxpayer must hand over 27.5% of the assets in the accounts at their highest value during any calendar year as a penalty. The fee is 50% if the account is with a bank that is on an ever-growing IRS list of banks and institutions that are under investigation by the U.S. government. It is a punishing number for a reason—you are basically purchasing a pass on higher penalties and criminal prosecution. For as cringeworthy of a figure as it might be, it pales in comparison to the totals that would be required once penalties, fines, and costs of investigation are added up. It also does not include possible jail time which is a cost all its own.

4) You won’t be alone. While these are all very compelling reasons for participating in the voluntary disclosure program, if you are still on the fence, know that the attorneys at Weisberg Kainen Mark are here to assist you at every step of the journey and can provide solid counsel on your options, rights, and responsibilities. They have extensive experience with offshore disclosures and can help you find the best possible solution for your particular situation. Contact the firm today to get started.

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Written by Weisberg Kainen Mark, PL

Weisberg Kainen Mark, PL

Weisberg Kainen Mark, PL is a Miami-based law firm focused on providing comprehensive legal support to individuals and corporate entities caught up in tax controversies or charged with a criminal act. As experienced trial lawyers with a passion for justice, our firm provides clients with compelling advocacy, attorney availability, and creative solutions to your tax or criminal law matters.