End of OVDP: What this will mean for US Expats behind on their US Tax Returns.

On September 28th 2018 the OVDP (Offshore Voluntary Disclosure Program) will be closed. Previously, OVDP was used as a resolution for taxpayer with exposer to potential criminal liability or/and civil penalties due to a willful failure to report foreign financial assets and pay tax due to those assets.

While active, over 56,000 taxpayers have used OVDP. For those who remain outside of compliance after September 28th that cannot file under other tax programs there may be major ramifications to the end of OVDP.

 

Penalties for Non Compliance:

Failure to File FBAR (Non-willful) – Up to $10,000 per violation

Failure to File FBAR (Willful) – As high as $100,000 or 50% of the total values per violation

Failure to File Form 8938 – $10,000, with an additional $10,000 each month after the IRS has notified the taxpayer, up to a max of $50,000

Failure to File Form 3520A – Greater of $10,000 or 5% of the gross value of the trust’s assets

Failure to File Form 5471 – $10,000, with an additional $10,000 each month starting 90 days after the IRS has notified the taxpayer, up to a max of $50,000

Failure to File Form 5472 – $10,000, with an additional $10,000 each month starting 90 days after the IRS has notified the taxpayer, up to a max of $50,000

Failure to File Form 8865 – $10,000, with an additional $10,000 each month starting 90 days after the IRS has notified the taxpayer, up to a max of $50,000

Failure to File Form 962 – 10% of the property transferred up to $100,000 per return if non-willful, no limit if willful

Fraud (Underpayment of Tax, Failure to File) – Up to 75% of the unpaid tax

Failure to File – 0.5% of tax, plus 0.5% each additional month, not to exceed 25%

Accuracy-Related Penalties – 20% or 40% on underpayment of tax

 Tax Evasion – Prison Term up to 5 years and a fine up to $250,000

False Returns – Prison Term up to 3 years and a fine up to $250,000

Failure to File Tax Return – Prison Term up to 1 year and a fine up to $100,000

Failure to File FBARs – Prison Term up to 10 years and a fine up to $500,000

Attempts to Defraud the Government – Prison Term up to 10 years or more and a fine up to $250,000

 

Contact us for expert tax advice regarding getting caught up on your US taxes