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Offshore Voluntary Disclosure Program

For many years it has been the responsibility of taxpayers to annually report their foreign accounts if, in total, they exceed $10,000. Congress has initiated a powerful attack to thwart unreported foreign accounts. Central to this effort is the Offshore Voluntary Disclosure Program (OVDP).

The purpose of the program is to encourage citizens to report offshore investments. The OVDP “carrot and stick” approach is largely punitive, however. Under current rules, taxpayers that come forward who are “non-willful” violators are subject to a 5% penalty on the highest unreported foreign account balance over an eight year period. But, for those who cannot claim “non-willful”, the penalty can be as high as 50%. In addition, penalties and interest are assessed on unpaid taxes. Under certain circumstances there are criminal penalties. Failure to report foreign accounts that are subsequently discovered by the IRS can result in penalties that far exceed the highest value of the account.

Navigating this complex area is difficult and dangerous. Professional guidance and judgment are required. Speak to us about your situation to determine the best strategy for you.

Artwork by Mark McMahon

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