2023 Offshore Voluntary Disclosure Program
THE IRS ANNOUNCED SIGNIFICANT CHANGES TO THEIR OFFSHORE VOLUNTARY DISCLOSURE PROGRAM IN 2023. HOW WILL THIS EFFECT TAXPAYERS IN 2023 AND MOVING FORWARD?
In late November 2018, the IRS announced new procedures for U.S. persons with previously undisclosed foreign financial accounts and foreign assets to voluntarily come into compliance with US Tax Law. The program is called the 2023 Offshore Voluntary Disclosure Program (“2018 OVDP”). These procedures are based on the IRS’s longstanding Voluntary Disclosure Program, which was modified both in 2014 and in 2016 based on recommendations from the National Taxpayer Advocates and the tax community at large.
Managing Partner, Kevin E. Thorn, has helped thousands of clients with complicated voluntary disclosures from all around the globe. The conclusion of his analysis of the IRS’s changes is the IRS hopes that by keeping the IRS Offshore Voluntary Disclosure Program open, they will inspire more taxpayers to come forward and voluntarily disclose their assets. As with all their Tax Amnesty Programs, the intention is to promote voluntary disclosures by mitigating the negative consequences non-compliance generally has according to the U.S. Tax Code.
While the IRS had threatened to terminate the IRS Offshore Voluntary Disclosure Program permanently in 2018, the program only had a brief closure before the IRS re-opened the program quietly. This quiet re-opening has not been widely promoted by the IRS. According to Mr. Thorn, however, it is logical that the IRS would keep the OVDP open. This is presumably because the IRS was expecting that a larger number of disclosures would be submitted with the threat of the program no longer being available. The consensus is that this may have not been the case. The re-opening of the program could be indicative of the IRS being unsatisfied with the number of OVDP submissions they received.
Even with the new 2018 OVDP, the IRS is expected to crack down even harder on those who have assets overseas yet do not disclose them voluntarily to the IRS. Penalties for non-compliance include monetary fees and penalty, increased tax and interest, and in some cases, criminal investigation and even incarceration. Again, the IRS provides Tax Amnesty programs in the hopes that taxpayers will take advantage and have refuge from at least some of the serious consequences offshore tax evasion can have. This is the opportunity the IRS aims to continue to provide with the changes made to the 2018 OVDP, however, taxpayers must note that tax amnesty is not assured. Hiring a Washington DC IRS Voluntary Disclosure lawyer is the only way to ensure that you have the best chance at navigating the disclosure of your offshore assets with as little negative consequence as possible.
As was the case in previous OVDPs, the IRS’s 2023 Offshore Voluntary Disclosure Program is intended for taxpayers who are at significant risk for criminal prosecution for intentional violations of tax laws and other tax-related crimes. This is because it offers a unique protection from criminal prosecution. This program is not intended for persons who made mistakes or were otherwise negligent in their tax and/or information reporting obligations. In fact, the IRS advises that taxpayers who did not commit tax-related crimes intentionally or who were otherwise engaged in criminal activity use a method other than the Voluntary Disclosure Program to come into compliance. Alternative methods include the IRS’s similar Tax Amnesty program, the Streamlined Filing Procedures.
Choosing a route for disclosing offshore accounts and assets is complicated. The parameters of both the IRS’s OVDP and the Streamlined Filing Compliance Procedures are difficult to understand. What makes a tax violation willful or non-willful is not easily determined by an individual who is not trained in international tax law. Only an experienced Washington DC tax attorney such as Kevin E. Thorn who has assisted in hundreds of offshore voluntary disclosures can best help you decide which program best suits your unique disclosure.
Taxpayers in the Washington DC Metro area with questions about the 2018 OVDP and how it could affect them in 2019 and beyond should consult a Washington DC IRS voluntary disclosure lawyer at Thorn Law Group. Kevin E. Thorn has been handling international tax cases for decades. He has seen multiple variations of the IRS’s Tax Amnesty programs, and he understands how to interpret IRS programs. Not disclosing foreign funds is a felony with serious repercussions, such as high penalties, tax and interest, criminal investigation, and even potential jail time. Because the legislation is continuously being modified and updated by the IRS, it is crucial that you choose a Washington DC tax attorney that stays up to date with the IRS’s Voluntary Disclosure Programs and who has experience as a former IRS Attorney. Mr. Thorn’s experience is invaluable in understanding how the IRS operates. Kevin E. Thorn has helped thousands of clients with their IRS voluntary disclosures, in turn saving them millions of dollars, and in some cases, keeping them out of jail.