On June 18, 2014, the Internal Revenue Service announced major changes to its 2012 offshore voluntary disclosure program (“OVDP”) providing new options to taxpayers in the United States and abroad to come into compliance with their U.S. tax obligations. The changes announced recently by the IRS include an expansion of the streamlined filing compliance procedures and modifications to the OVDP. These changes reflect the input of the tax community. Since the OVDP launch in 2012, over 45,000 taxpayers have come into compliance. Those taxpayers have paid approximately $6.5 billion in taxes, interest, and penalties.
The IRS has worked closely with the U.S. Justice Department in pursuing taxpayers and foreign financial institutions that may have been aiding in the avoidance of tax filings and with it, the concomitant tax payments. On July 1, 2014, the fight to combat the misuse of foreign and offshore accounts will gain new strength when new information reporting resulting from the Foreign Account Tax Compliance Act (“FACTA”) will take effect. As of July 1st, thousands of foreign financial institutions will have to report to the IRS the existence of foreign accounts held by U.S. citizens.
Taken together, the modifications to the OVDP and the new reporting requirements of FACTA, U.S. taxpayers will have more opportunities to come into compliance and satisfy their tax obligations to the United States. Cerini & Associates LLP is here to help you in taking advantage of these opportunities.