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If you have a foreign bank account or any other kind of foreign financial account that has not been reported to the IRS on a Foreign Bank Account Report, you are at risk of having severe criminal and financial charges brought against you. However, the IRS Offshore Voluntary Disclosure Program can offer a solution for taxpayers with previously undisclosed foreign assets. OVDP can essentially eliminate taxpayer’s risk of criminal prosecution for not previously disclosing their overseas accounts. This includes failure to file or report any earnings from those accounts to the IRS on a Foreign Bank Account Report (FBAR) yearly. Voluntary disclosure through OVDP allows taxpayers to pay the IRS a mixture of tax, penalties, and interest instead of facing potential major civil and criminal charges. Foreign financial accounts that should be disclosed on a Foreign Bank Account Report (FBAR) include any of the following that are held with an institution located outside the United States:

  • Any checking and/or savings accounts
  • Brokerage accounts
  • Investment accounts
  • Private wealth management accounts
  • Cash-value life insurance or annuities

If you have a financial account or assets with an institution outside of the US that you have not reported to the IRS, you may be in violation of the Foreign Bank Account Report regulations. We urge you to contact our law firm for a confidential consultation with Chad Silver, Esq. Call 800-369-2629 to learn more. We offer a free consultation, will take over all correspondence and communications with the IRS, and help you avoid civil penalties and possible criminal prosecution.

It is imperative to act quickly- if the foreign financial institution at which the taxpayer has an account has been publicly identified as being under investigation or as cooperating with a government investigation, the taxpayer could be charged a penalty of up to 50 percent of their assets.

Offshore Voluntary Disclosure Program

Many taxpayers make the mistake of failing to report worldwide assets and accounts on their tax return. If you have any assets overseas that are collecting dividends, or even rental property overseas, it needs to be reported on your yearly income tax to avoid penalties. Additionally, a Foreign Bank Account Report or FBAR must be filed annually to avoid possible jail time, criminal prosecution and high civil penalties.

An FBAR must be filed by taxpayers with financial accounts outside of the United States which total more than $10,000. For taxpayers with offshore accounts totaling more than $50,000, a Statement of Foreign Financial Assets (Form 8938) may also be required to file each year. These forms need to be filed even if the taxpayer only has signatory authority over the accounts and no actual legal claim to the funds in the accounts.

For taxpayers who un-willfully neglect to do this, or have made an honest mistake on a tax return, the Streamlined Offshore Voluntary Disclosure Program may be the best solution for them. Prior to the streamlined OVDP, which was introduced by the IRS on June 18, 2014, taxpayers were subject to a 27.5 percent penalty for not reporting foreign assets or overseas income. Currently taxpayers may only be subject to a 5 percent penalty, if they qualify.

However, taxpayers with undisclosed foreign assets need to act quickly- if the foreign financial institution at which the taxpayer has an account has been publicly identified as being under investigation or as cooperating with a government investigation, the taxpayer could be charged a penalty of up to 50 percent of their assets.

Eligible US taxpayers who resided outside the US in any one or more of the most recent three years for which the US tax return due date has passed (2012 through 2014) will not pay any penalties.

OVDP vs Streamlined OVDP

What is the difference between the OVDP and the Streamlined Offshore Program?
  • The original Offshore Voluntary Disclosure Program through the IRS subjects taxpayers to a 27.5 percent penalty fee on their overseas assets.
  • The new Streamlined Offshore Program has a reduced penalty of only 5% of those assets.
  • The streamlined version of the OVDP is only applicable to taxpayers who can demonstrate non-willfulness.
  • To file an OVDP, taxpayers have to submit 8 years of amended income tax returns.
  • To file under the Streamlined Offshore Program, taxpayers are required to submit amended tax returns for the past 3 years, file the last 6 years of Foreign Bank Account Reports, and pay the 5% penalty fee upfront.
How do I know which program is right for me?

It is important to note, the streamlined OVDP is only applicable to taxpayers whose conduct was non-willful, meaning that they simply made a mistake on their tax return that was the result of a good faith misunderstanding. Taxpayers who knowingly violated the law will be subject to the higher 27.5 percent penalty, but can still avoid criminal and civil charges through OVDP. Taxpayers who are already being audited by the IRS or whose non-compliance has already been identified by the government are not eligible for either resolution.

The IRS has a list of individuals that reside in the United States that have offshore bank accounts. If the IRS finds out about your offshore bank account before you report it, they can seize your accounts and charge you criminally. Let Chad Silver Esq., LLC help you avoid criminal prosecution and potential jail time due to undisclosed foreign assets.

Offshore Voluntary Disclosure Initiative Frequently Asked Questions

Who is eligible to make a voluntary disclosure under this program?
  • Taxpayers who have legal source funds invested in offshore assets that they have not disclosed to the IRS.
  • Entities, such as corporations, partnerships, and trusts with previously undisclosed offshore assets.
  • Any taxpayer who is already under a civil or criminal examination by the IRS regardless of whether it relates to undisclosed OVDP assets is ineligible to a make a voluntary disclosure.
Why should I make a voluntary disclosure?
  • Taxpayers holding undisclosed foreign accounts and assets should make a voluntary disclosure because it enables them to become compliant, avoid civil penalties, and generally eliminate the risk of criminal prosecution for all issues relating to tax noncompliance and failing to file Foreign Bank Account Reports (FBARs).
  • Taxpayers simply filing amended returns without going through an OVDP process DO NOT eliminate the risk of criminal prosecution.
  • Moreover, the IRS remains actively engaged in identifying those with undisclosed foreign financial accounts and assets. This information is increasingly readily available to the IRS under tax treaties, through submissions by whistleblowers, and other sources.
What kinds of assets do I need to disclose to the IRS on my yearly tax return?
  • All offshore assets directly or indirectly owned by the taxpayer including the following:
    • Financial accounts holding cash
    • Brokerage or investment accounts
    • Cash-value life insurance or annuities
    • Tangible assets such as real estate or art
    • Securities or other custodial assets
How do I know if I have to file a Foreign Bank Account Report with my yearly income tax return?
  • You must file an FBAR with your yearly income tax return if you have financial assets outside of the United States which total more than $10,000.
  • Taxpayers with offshore accounts totaling more than $50,000 may need to file a Statement of Foreign Financial Assets (Form 8938) in addition to an FBAR each year.
  • These forms need to be filed even if the taxpayer only has signatory authority over the accounts and no actual legal claim to the funds in the account.
What are some of the criminal charges I might face if I have undisclosed offshore assets, I don’t participate in the OVDP and the IRS examines me?
  • Tax evasion
    • If convicted a person is subject to a prison term of up to five years and a fine of up to $250,000.
  • Filing a false return
    • If convicted a person is subject to up to three years in prison and a fine of 250,000.
  • Failure to file and income tax return
    • If convicted, a person is subject to up to one year in prison and a fine of up to 100,000.
  • Willfully failing to file and FBAR and willfully filing a false FBAR
    • If convicted, a person is subject to a prison term of no more than 10 years or a fine of up to 250,000.
  • Conspiracy to defraud the government, and conspiracy to commit offense or to defraud the United States
    • If convicted, a person is subject to a prison term of no more than five years and a fine of up to 250,000.
Is the Offshore Voluntary Disclosure Program or the Streamlined Offshore Program the better option for me to avoid criminal charges and civil penalties?
  • The original Offshore Voluntary Disclosure Program through the IRS subjects taxpayers to a 27.5 percent penalty fee on their overseas assets.
  • The recently updated Streamlined Offshore Program has a reduced penalty of only 5% of those assets.
  • The streamlined version of the OVDP is only applicable to taxpayers who can demonstrate non-willfulness, meaning that they simply made a mistake on their tax return that was the result of a good faith misunderstanding.
  • To file an OVDP, taxpayers or their representative, have to submit 8 years of amended income tax returns.
  • To file under the Streamlined Offshore Program, taxpayers or their representative are required to submit amended tax returns for the past 3 years, file the last 6 years of Foreign Bank Account Reports, and pay the 5% penalty fee upfront.
We provide thorough, up-to-date knowledge of Tax Law

At Chad Silver, Esq., LLC, we keep up to date on the continuously evolving rules and regulations related to IRS offshore initiatives. We will bring your offshore account into IRS compliance and minimize your criminal exposure to the IRS swiftly through efficiency and accuracy. We will handle all correspondence and communication with the IRS on your behalf to guarantee your case is being processed correctly and in a timely manner.

Once a non-prosecution agreement is reached with the Internal Revenue Service, the attorneys at Chad Silver, Esq., LLC will endeavor to meet all of the Offshore Voluntary Disclosure requirements, including the filing of all required amended federal income tax returns and FBAR returns on your behalf.

Consult Our Attorneys

If you have an offshore account that you have not previously disclosed to the IRS, we urge you to contact our law firm immediately for a confidential consultation with Chad Silver, Esq., LLC. Once a non-prosecution agreement is reached with the Internal Revenue Service, the attorneys at Chad Silver, Esq., LLC will endeavor to meet all of the Offshore Voluntary Disclosure requirements, including the filing of all required amended federal income tax returns and FBAR returns on your behalf.

Call 800-369-2629 to learn more.