The IRS recently announced that is ending its OVDP program which has been in effect since 2009, closing it by September 28, 2018. The OVDP is a voluntary disclosure program specifically designed for taxpayers with exposure to potential criminal liability and/or substantial civil penalties due to a willful failure to report foreign financial assets and pay all tax due in respect of those assets. With this program, taxpayers with undisclosed income from offshore accounts could disclose foreign accounts for a small penalty rather than risk detection by the IRS and possible criminal prosecution.
Instated in 2009, the success of the program led to the open-ended 2012 OVDP which the IRS began to ramp down in 2014. Since its launch in 2009, more than 56,000 taxpayers have used one of the programs to comply voluntarily, paying a total of $11.1 billion in back taxes, interest and penalties. The number of disclosures peaked in 2011 with 18,000 people coming forward, and continually fell since then with only about 600 disclosures in 2017. The end of this program reflects advances in third-party reporting and increased awareness of U.S. taxpayers of their offshore tax and reporting obligations, however the IRS will continue to combat offshore tax avoidance with taxpayer education, whistleblower leads, civil examination and criminal prosecution. Since 2009, 671 taxpayers have been indicted on international criminal tax violations with a total of 1,545 taxpayers indicted on criminal violations related to international activities by the IRS.
While the OVDP is ending, streamlined filing compliance procedures for taxpayers who may have not been aware of their filing obligations will remain in place. This program has assisted about 65,000 taxpayers come into compliance with the IRS and as with the OVDP the IRS has stated that it may end SFCP but has not announced any dates yet. Because the circumstances of taxpayers with foreign financial assets vary widely, the IRS will continue offering the IRS-Criminal Investigation Voluntary, Disclosure Program, Streamlined Filing Compliance Procedures, delinquent FBAR submission procedures, and delinquent international information return submission procedures in order to continue to help taxpayers get into compliance after the ending of the OVDP.