The 3 advantages of the Offshore Voluntary Disclosure Program (OVDP)
If you are wishing to avoid criminal prosecution and be compliant with The Foreign Account Tax Compliance Act (FATCA) you will need to accurately report on any foreign financial accounts and foreign assets you or your company or business entity holds. In November of 2018, the IRS issued new guidance on how to do this.
What is the OVDP?
The Offshore Voluntary Disclosure Program (OVDP) is way to report foreign financial assets and pay the taxes due in order to avoid criminal prosecution. The OVDP is significant because it is a bona fide avenue for those holding assets outside of the U.S. to act preemptively. Some of these processes are quite simple and others can require multiple steps, depending on the assets and the details of the situation. In all cases you will need to submit a preclearance letter and six years of FBARs/tax returns (or the full duration of the noncompliance). The streamlined process requires the amending of the last three years of tax returns
What are the benefits of the OVDP?
Generally speaking, the OVDP allows you to “opt out” and thus protect yourself. The benefits are:
- When you willingly disclose you can avoid potential criminal liability
- By filing voluntarily you can also circumvent, in many cases, substantial civil penalties
- When you step forward preemptively you protect your business entity from a public trial and all of the potential shareholder/business reputation fallout
Many people find that taking this step relieves them of undue stress. Once the issue has been successfully resolved you are able to confidently move forward.
What does a qualified OVDP team include?
Depending on the details of the case, compliance typically entails a team of highly skilled tax lawyers, CPAs, and former IRS agents. Our off-shore account attorneys can help if you wish to know if you are a good opt-out candidate. It is imperative that you work with an experienced legal team to determine “willfulness” to ensure you apply for the appropriate international tax amnesty program. Seek out a team that has settled their cases with no or very minimal monetary penalties for their clients.