When it comes to reporting overseas income there are always options in place to help American citizens report their foreign income and foreign bank accounts to the IRS. The most familiar was the Offshore Voluntary Disclosure Program which has recently been discontinued ( ), as of September 28, 2018. There are still options available for those who have not filed and still wish to voluntarily report.
The OVDP began in 2009 as a way of recovering lost tax revenues. The United States is one of the few countries that does require all of its citizens to report their revenue even if it was not earned, spent, or banked in the United States. Many citizens do not realize the extent of their reporting requirements and other citizens deliberately do not report. When the program began it brought attention to these obligations, and there were about 18,000 submissions per year, but since 2017, as more and more people have disclosed, the submissions had dwindled to 600. The Offshore Voluntary Disclosure Program recovered about $11 Billion in revenue for the IRS; the program option was popular because there were no criminal prosecutions for non-disclosure, but penalties were high. The program was overhauled in 2014 into a streamlined option, which was simpler and had lowered penalties.
So now what?
Now that the Offshore Voluntary Disclosure Program has ended, what can people do who wish to voluntarily disclose their unreported income? Requirements to be in compliance with FATCA, the Foreign Account Tax Compliance Act are still there, and there are a number of options available for people to file delinquent foreign assets and international information returns. As a result, the IRS will continue offering the streamlined program, the IRS Criminal Investigation Voluntary Disclosure Program, delinquent FBAR submission procedure and Delinquent international information return submission procedures. These four programs remain in effect.
What’s the difference?
There are many differences, and some may not be obvious at first, and it can be difficult to know which option is the right one without expert advice. The programs have different needs and outcomes and are designed for different circumstances and it can be difficult to understand which one is the right one for you. In fact, the world of international taxation does require having an expert tax firm to guide you through it. A do-it-yourself method of reporting is not a good idea, nor is seeing a private tax attorney without experience in filing taxes for people living, and working overseas. There are numerous ways which a more in-depth look at your taxes can save you money and help you avoid penalties or even prosecution.
One of the reporting requirements that are still in effect even for those who have correctly filed their income statements is the necessity to correctly report all bank accounts they hold, including the foreign bank accounts containing foreign income. These regulations differ and citizens may not be aware of their obligations. The Offshore Voluntary Disclosure Program ( ) may have ended but its obligations are still in place. If you are an expat, then see an expert for help with your taxes.