How Can OVDP and Streamlined Programs Help You with Your Tax Debt
The IRS OVDP program is currently suspended, but we will help you find an alternative for you offshore disclosures. Email us at email@example.com
Tax debt is a heavy burden, especially if you are an expat or having offshore accounts. The good news is, the IRS has developed two programs, OVDP and the Streamlined program, for people in similar situations that can give a much needed tax debt relief. Here’s how they can help you.
The OVDP (Offshore Voluntary Disclosure Program) provides the most painless way out if you have not declared your offshore assets in the past or you need to amend your tax returns. You will pay less penalty charges and also won’t be prosecuted, which on its own is a good enough reason to take advantage of the program. What you will need to do is:
- File up to 8 years of tax returns (or amended such)
- File up to 8 years of FBARs
- Pay the taxes you owe to date with interest and 20% penalty charge
- Pay 27.5% penalty on your highest offshore account balance.
Although the main purpose of OVDP is to deal with matters and mistakes on foreign tax returns, in reality you would be able to amend your tax returns even for issues related to your domestic accounts. So for crypto investors, this could be a good solution for amending tax returns since there’s no official amnesty program dedicated to cryptocurrencies.
These forms can be intimidating, and quite scary. The IRS is asking for a lot of information regarding the offshore account, and it might be tempting to simply ignore this task, and hope the IRS never detects the account. However, this approach presents tremendous risk to a taxpayer. Civil penalties could be assessed for actions such as failing to file an FBAR, failing to file form 8938, which reports the taxpayer’s interest in foreign accounts and failing to file form 3520, which is the Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts. This list is not all-inclusive, as there are many other violations. All of these could result in the assessment of penalties, which could be as high as $50,000 per violation. In addition, a taxpayer could face criminal charges for these same issues.
If you have willfully hidden funds in foreign accounts, then OVDP is the best way to come clean. File 8 years back of income tax returns, 8 years back of FBAR reports, pay taxes, interest and pay up to 27.5% penalties on the highest balance over 8 FBAR years reported, but AVOID CRIMINAL PROSECUTION. Penalties may increase to 50%, if your offshore financial institution or the facilitator who helped you to open the offshore account, is under government investigation.
If you are a taxpayer with an offshore account and want to pursue the OVDP Program, contact an experienced tax professional at FAS CPA & Consultants today with just one Click Here or email us to firstname.lastname@example.org and get a free consultation. Our team can provide assistance in getting all of your tax matters resolved quickly and efficiently.
The Streamlined Program
The Streamlined program may seem better than the OVDP to many. This is so because you are only required to file 3 years of tax returns and 6 FBARs instead of 8 of each. You must file as non-willful and clarify that to avoid further issues. There are also no penalties involved for U.S. persons living abroad, or 5% penalty on the highest offshore account balance for taxpayers living in the U.S.
The problem with the Streamlined program comes from the fact that it is usually connected to IRS auditing, which may be risky for some crypto investors. These audits are no childish game and the IRS goes really deep into inspecting all of your financial operations and discovering your secrets if you have such. If you fail the audit you may still face criminal prosecution. This is the very reason why we recommend regular business auditing done by tax accountants to promote transparency and prepare you for an IRS audit if you ever have to go through it.
Are you having problems with tax debt? We can help you resolve them in the best way that suits your personal situation. FAS CPA & Consultants have years of experience, we have helped hundreds of U.S. taxpayers save money from their taxes and relieve their tax debts. We’d love to help you too. Call us today or email at email@example.com and book your free consultation with one of our professional advisors.
Readers should note that this article is only intended to convey general information on these issues and that FAS CPA & Consultants (FAS) in no way intends for the contents of this article to be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services. This article cannot serve as a substitute for such professional services or advice. Any decision or action that may affect the reader’s business should not rely solely on the contents of this article, but should rather be consulted on with a qualified professional adviser. FAS shall not be responsible for any loss sustained by any person who relies on this presentation. This article is subject to change at any time and for any reason.
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