Overseas Voluntary Disclosure Program update
Last Wednesday, 14th March the IRS announced that the Offshore Voluntary Disclosure Program (OVDP) will end on 28th September 2018, and be reduced with immediate effect. Started in 2009, the Offshore Voluntary Disclosure Program has had various versions, which enabled US taxpayers to voluntarily resolve any past or present non-compliance, especially related to unreported foreign financial assets or failure to file foreign information returns in the US.
Overseas Voluntary Disclosure Program – history
The IRS originally estimated there were over 6 million US taxpayers with foreign assets that were not compliant with their US tax obligations. The Offshore Voluntary Disclosure Program (OVDP) was designed to encourage citizens to voluntarily declare and pay tax without legal action, and the OVDP has had some success with over $11 billion in back taxes, interest and penalties paid.
However, only 56,000 taxpayers actually came forward, an insignificant number when compared to the total number of non-compliant taxpayers, and tax violations will continue to be a top priority for the IRS. The IRS clearly feels that the time for voluntary disclosure of past misdemeanours has come to an end.
Emboldened with the cooperation of foreign governments and FATCA declarations from companies around the world the IRS may be taking a different route. With enhanced intelligence procedures, whistle-blowers, and international foreign account disclosure initiatives, it is likely that a significant number non-compliant taxpayers can be found. Do not be one of them.
Work with the IRS
Be clear, it is better to come forward under a program such as the Offshore Voluntary Disclosure Program than it is to be found out! It is unlikely the IRS will be all that understanding when dealing with offshore non-compliance in the future.
If you are a non-compliant taxpayer, we strongly recommend that you consider your options prior to the end of the OVDP in September.
We offer a forensic review of your current offshore pension or SIPP and investments they hold. The fact is that increased investment reviews combined with lower charges may make a significant difference at retirement by boosting potential returns according to research published in the New York Times.
Have you been caught out? Some offshore salesmen promoting QROPS as an investment solution live in a parallel universe where they claim to make world stock markets behave differently by transferring pension funds offshore, than if the same funds are used from and within UK pension funds. Think and behave logically, if promises of bigger returns can only be achieved by moving to a QROPS or International SIPP then why hasn’t the entire UK pension industry moved offshore? It hasn’t!
End of article: IRS Announces End to Overseas Voluntary Disclosure Program
The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up to date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not except any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.
This article was published on 21st March 2018
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