IRS Voluntary Disclosure

IRS Voluntary Disclosure: How to Avoid Tax Issues Involving Offshore Accounts

When you have offshore accounts, understanding the tax requirements in the US that can arise from those accounts is essential to protecting your assets, and in some cases, your freedom. There are heavy penalties associated with an IRS discovery of an undisclosed offshore account. The exorbitant fines and penalties that may result from prosecution can be crippling. The longer your offshore accounts stay out of legal compliance with the IRS, the more you are exposed to prosecution.

Amnesty for All?

IRS Voluntary Disclosure
IRS Voluntary Disclosure

In 2009, the IRS began its first Offshore Voluntary Disclosure Program (OVDP) as an amnesty initiative for individuals to bring their offshore accounts into legal compliance. In 2014, this process was streamlined to offer more people the ability to resolve their offshore account tax issues without risking criminal exposure.

The IRS Voluntary Disclosure program has experienced many key revisions from the original version that was released in 2009. Even with the revisions that were enacted in 2014, which were meant to streamline the process for those who wished to participate in Voluntary Disclosure, there are several different eligibility requirements that must be met before you qualify for the program. One of the key qualifications for this process is the absence of a current investigation. If the IRS is already investigating you, you may not be eligible to participate in this program.

It is important to note that although a voluntary disclosure program may not guarantee that a taxpayer won’t be criminally prosecuted, in an abundance of cases, entering into an IRS voluntary disclosure could result in a favorable recommendation from prosecution.

Although the program does not offer an absolute guarantee of amnesty, it is still an important option to consider. Given the extremely heavy consequences that can result from being out of compliance with the IRS, participating in the program should be a serious consideration for anyone with currently undisclosed offshore accounts. The IRS Voluntary Disclosure process is not short – in some instances, it can take in upwards of two years. Because of the complexity of the Voluntary Disclosure process, it is important to solicit the advice of a skilled and knowledgeable attorney who can guide you through the process.

Program Requirement

There are two main requirements to participate in the IRS Voluntary Disclosure process. The first requirement is that the taxpayer displays an intention to cooperate with the IRS to determine what taxes are owed. The second is to make arrangements with the IRS to satisfy the income tax owed, and any penalties and interest that the IRS deems that the taxpayer is liable for, in good faith.

The IRS Voluntary Disclosure program is available to individuals who both acted willfully in hiding assets from the IRS and individuals who did not willfully hide their offshore accounts from the IRS. Because the program is intended to help the owners of offshore accounts to bring themselves into compliance with the law, the IRS will allow participants who, at one time, deliberately kept certain assets hidden. However, it is important to note that these differing circumstances are not treated in exactly the same way. The major difference in the way that these accounts are handled is in the penalty interest assessed and the timing in which their penalties will be paid to the IRS.

Changes in the IRS Voluntary Disclosure Program

The IRS Voluntary Disclosure program went through numerous changes from the point that it was developed in 2009 to the 2014 version that is currently being used. Despite these revisions, which were intended to make the process easier, participating in the program can still be a confusing and overwhelming experience.

To help you navigate the IRS Voluntary Disclosure program, it is critically important to solicit the assistance of a qualified attorney. A skilled lawyer will be able to advise you properly on the steps to enter an IRS Voluntary Disclosure, whether you qualify for the program, and what your exposure is when attempting to bring any offshore accounts into legal status. Participation in the program may be the best option for many people with undisclosed offshore accounts. To mitigate the risks and help you understand your options, you will want a knowledgeable attorney who can guide you through the process.

When entering into an IRS amnesty program like the IRS Voluntary Disclosure program, it is essential to know your risks and the complexities that surround your individual tax situation. Contact to discuss with our team of experienced professionals if the IRS Voluntary Disclosure program is right for your tax situation.