Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

How to apply for voluntary offshore disclosure

Author: James F. McDonough

Date: April 3, 2018

Key Contacts

Back

Taxpayers with outstanding offshore asset tax obligations have one last opportunity to take advantage of the Internal Revenue Service’s Offshore Voluntary Disclosure Program (OVDP). The program ends on September 28, 2018. 

Boat in the water
Photo courtesy of Nick Karvounis (Unsplash.com)

For taxpayers holding undisclosed foreign accounts and assets, making a voluntary disclosure has significant benefits. Most notably, it allows you to become compliant, avoid substantial civil penalties, and generally eliminate the risk of criminal prosecution for all issues relating to tax noncompliance and failing to file a Report of Foreign Bank and Financial Accounts (FBAR).  

Understanding the Offshore Voluntary Disclosure Process

The Offshore Voluntary Disclosure Program requires taxpayers to submit a significant amount of information to the IRS. Given the complexity of the disclosures, it is always advisable to work with an experienced attorney who can walk you through the entire process. Below is a brief summary of the steps:

  • Submit a preclearance letter: The first step of the OVDP is to obtain preclearance to make a voluntary disclosure. Taxpayers or their representatives must send a facsimile to the IRS – Criminal Investigation Lead Development Center (LDC) with: (a) Applicant identifying information including complete names, dates of birth (if applicable), tax identification numbers, addresses, and telephone numbers; (b) Identifying information of all financial institutions at which undisclosed OVDP assets were held. Identifying information for financial institutions includes complete names (including all DBAs and pseudonyms), addresses, and telephone numbers; (c) Identifying information of all foreign and domestic entities (e.g., corporations, partnerships, limited liability companies, trusts, foundations) through which the undisclosed OVDP assets were held by the taxpayer seeking to participate in the OVDP; this does not include any entities traded on a public stock exchange. Information must be provided for both current and dissolved entities. Identifying information for entities includes complete names (including all DBAs and pseudonyms), employer identification numbers (if applicable), addresses, and the jurisdiction in which the entities were organized; and (d) Executed power of attorney forms (if represented).
  • Make initial disclosure: Criminal Investigation will then notify taxpayers or their representatives via fax whether or not they are eligible to make an offshore voluntary disclosure. It may take up to 30 days to receive the decision. Taxpayers pre-cleared for OVDP then have 45 days from receipt of the fax notification to submit the Offshore Voluntary Disclosure Letter.
  • Submit full disclosure: Criminal Investigation will review the Offshore Voluntary Disclosure Letter and notify taxpayers or representatives by mail or facsimile whether their offshore voluntary disclosures have been preliminarily accepted as timely or declined. This typically occurs within 45 days of receipt of a complete Offshore Voluntary Disclosure Letter. Once the voluntary disclosure has been preliminarily accepted, within 90 days, the taxpayer must send the full voluntary disclosure, which requires the submission of more detailed information. Examples include previously filed federal tax returns and complete and accurate amended federal income tax returns for all tax years covered by the voluntary disclosure, with applicable schedules detailing the amount and type of previously unreported income from foreign financial accounts or domestic sources. A Consent to Extend the Time to Assess Tax (Form 872) and a Consent to Extend the Time to Assess Civil Penalties Provided by 31 U.S.C. 5321(the FBAR consent form) must also be provided with the voluntary disclosure. Taxpayers must also submit payment for the total amount of tax, interest, offshore penalty, accuracy-related penalty, and, if applicable, the failure-to-file and failure-to-pay penalties, for the voluntary disclosure period must be sent with information identifying the taxpayer name, taxpayer identification number, and years to which the payments relate.

Case resolution: After the taxpayer submits a full and complete submission, the case is assigned to a civil examiner to complete the certification of the tax returns for accuracy and completeness. Finally, the taxpayer and the IRS will enter into a closing agreement that resolves the case. 

Taxpayers Must Act Now

 The clock is ticking for taxpayers to take advantage of the Offshore Voluntary Disclosure Program. Complete offshore voluntary disclosures conforming to the requirements of OVDP must be received or postmarked by September 28, 2018. In order to qualify for the program, they may not be partial, incomplete, or placeholder submissions. To find out if you may benefit from the OVDP, contact Scarinci Hollenbeck’s knowledgeable tax attorneys today.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide post image

How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide

Closing your business can be a difficult and challenging task. For corporations, the process includes formal approval of the dissolution, winding up operations, resolving tax liabilities, and filing all required paperwork. Whether you need to understand how to dissolve a corporation in New York or New Jersey, it’s imperative to take all of the proper […]

Author: Christopher D. Warren

Link to post with title - "How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide"
Gross Lease vs. Net Lease: Understanding the Key Differences post image

Gross Lease vs. Net Lease: Understanding the Key Differences

Commercial leases can take a variety of forms, which is often confusing for both landlords and tenants. Understanding the different types, especially the gross lease structure, is important when selecting the lease that best suits your needs. One key distinction between lease types is how rent is calculated and paid. This article addresses the two […]

Author: Robert L. Baker, Jr.

Link to post with title - "Gross Lease vs. Net Lease: Understanding the Key Differences"
What to Do If You Are Impacted by a Retailer Bankruptcy Part 2 post image

What to Do If You Are Impacted by a Retailer Bankruptcy Part 2

Over the past year, brick-and-mortar stores have closed their doors at a record pace. Fluctuating consumer preferences, the rise of online shopping platforms, and ongoing economic uncertainty continue to put pressure on the retail industry. When a retailer seeks bankruptcy protection, a myriad of other businesses are often impacted. Whether you are a supplier, customer, […]

Author: Brian D. Spector

Link to post with title - "What to Do If You Are Impacted by a Retailer Bankruptcy Part 2"
The Current Administration's Proposals for the Financial Services and Banking Industries Will Affect Your Business post image

The Current Administration's Proposals for the Financial Services and Banking Industries Will Affect Your Business

Since his inauguration two months ago, Donald Trump’s administration and the Congress it controls have indicated important upcoming policy changes. These changes will impact financial services policies and priorities. The changes will particularly affect cryptocurrency, as well as banking rules and regulations. Key Regulatory Changes in Cryptocurrency For example, in the burgeoning cryptocurrency business environment, […]

Author: Dan Brecher

Link to post with title - "The Current Administration's Proposals for the Financial Services and Banking Industries Will Affect Your Business"
Tips for Commercial Landlords Impacted by Wave of Retailer Bankruptcies Part 1 post image

Tips for Commercial Landlords Impacted by Wave of Retailer Bankruptcies Part 1

The retail sector has experienced a wave of bankruptcy filings over the last year. Brick-and-mortar businesses in financial distress include big-name brands like Big Lots, Party City, The Container Store, and Vitamin Shoppe. When large retailers seek bankruptcy protection, they are not the only businesses impacted. Landlords can be particularly hard hit. While commercial landlords […]

Author: Brian D. Spector

Link to post with title - "Tips for Commercial Landlords Impacted by Wave of Retailer Bankruptcies Part 1"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* 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.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!

Please select a category(s) below: