US Citizens, and certain others, are generally required to disclosure offshore holdings and pay necessary taxes that may be due in connection therewith. Failure to properly disclose can result in significant civil penalties, and can in some instances be criminal.
For years, the IRS has had a program known as the Offshore Voluntary Disclosure Program. The IRS website describes it this way: “The Offshore Voluntary Disclosure Program (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. OVDP is designed to provide to taxpayers with such exposure (1) protection from criminal liability and (2) terms for resolving their civil tax and penalty obligations.” The IRS recently announced that the current version of that program, the 2014 OVDP, will be ending as of September 28, 2018. On a FAQ page, the IRS offers the following reason for its ending: “While the program has been successful in the past, there has been a significant decline in the number of taxpayers participating as well as an increase in awareness of offshore tax and reporting obligations. The IRS has previously stated publicly that the 2014 OVDP would close at some time. Taxpayers have had the opportunity to participate in OVDP since 2009.”
A reason for the “significant decline” is not mentioned. Perhaps it is because most people with such holdings have either voluntarily disclosed or already been caught not disclosing. Perhaps it is something else. Whatever the reason, the legal responsibility to properly disclose and to pay any necessary taxes remains. In addition, it’s generally better to “come clean” than get caught hiding.
If you want to read more about closing of the IRS 2014 OVDP Program, you can check out their FAQ Page. Ultimately though, if you are someone who happens to have undisclosed offshore holdings and have not yet taken advantage of the 2014 OVDP, you should promptly speak with your tax advisor(s) to sort it out and, if action on your part is required, put in place a plan for voluntarily taking that action sooner rather than later.