Offshore net still entangling taxpayers: a Q & A on the OVDP

The IRS's stepped-up enforcement campaign on offshore account disclosure has been going on for years now. Combined with the rollout of the Foreign Account Tax Compliance Act, it has put great pressure on taxpayers with offshore holding as well as foreign financial institutions.

Faced with possible criminal penalties, many taxpayers have chosen to participate in the IRS's limited-amnesty program for offshore account disclosure. Yet in a recent case, a man was sentenced to jail time despite applying to participate in the program.

In this post, we will offer a Q & A on the program, in light of that case.

What do limited-amnesty programs do?

Limited-amnesty programs allow people with undisclosed foreign accounts to voluntarily tell the IRS about those accounts, and agree to cooperate, in exchange for an agreement that they won't be subjected to criminal charges.

The programs also enable participating taxpayers to minimize civil fines and penalties.

How long has the IRS been offering such programs?

The IRS offered limited-time programs in 2009 and 2011. At one time, the program was called the Offshore Voluntary Disclosure Initiative (OVDI).

It is now called the Offshore Voluntary Disclosure Program (OVDP).

How many people have used the programs?

Tens of thousands of people have participated in limited-amnesty programs offered by the IRS for offshore account disclosure. The number of participants is more than 54,000. Cumulatively, these participants have paid a whopping $8 billion to resolve their taxes on foreign accounts. This figure includes not only back taxes, but also penalties and interest.

Is there a downside to participating in a limited-amnesty program?

It's important to remember that avoiding prosecution requires more than merely applying for the program. It also requires cooperating fully with the IRS.

If you apply but don't tell the IRS about all applicable accounts, you could dig yourself into even deeper trouble. That is what happened recently to a New York restaurant owner, who applied for the limited-amnesty program but then transferred money to another offshore account at a different bank.

The IRS found out about this and the man was eventually convicted was criminal tax evasion.

No Comments

Leave a comment
Comment Information
  • ABA | American Bar Association
  • AV Preeminent | Peer Rated for Highest level of Professional Excellence | 2018
  • Virginia State Bar | 1938
  • Super lawyer | 2018
  • DC Bar
  • American Bar Academy of Attorney - CPAs | The power of the dual view
Email Our Team

Contact Us to Get Started Today

Located in the Washington, D.C area, we serve clients in the District of Columbia, Maryland and Northern Virginia, as well as across the country and overseas. For a free initial consultation, call 202-381-1261 or complete our brief online form.

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Six Convenient Office Locations in and around the DC Metropolitan Area

Washington, D.C.
1629 K Street NW, Suite 300
Washington, D.C. 20006

Phone: 202-618-1873
Fax: 888-235-8405
Map & Directions

Columbia Office
10440 Little Patuxent Parkway, Suite 300
Columbia, MD 21044

Phone: 410-497-5947
Fax: 888-235-8405
Map & Directions

Annapolis Office
888 Bestgate Road
Suite 400
Annapolis, MD 21401

Phone: 410-497-5947
Fax: 888-235-8405
Map & Directions

Fairfax Office
8280 Willow Oaks Corporate Drive
Suite 600
Fairfax, VA 22031

Phone: 703-621-7169
Fax: 888-235-8405
Map & Directions

Rockville Office
199 E. Montgomery Avenue
Suite 100
Rockville, MD 20850

Phone: 240-599-5009
Fax: 888-235-8405
Map & Directions

Baltimore Office
400 East Pratt Street
8th Floor
Baltimore, MD 21202

Phone: 443-743-3381
Fax: 888-235-8405
Map & Directions