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Get the information you need on the IRS voluntary disclosure program to learn if it's right for you from one of the most experienced tax lawyers in the country.

Tax Deal with Switzerland Gives U.S. DOJ Deep Access To Your Account Information

Federal law requires U.S. taxpayers with more than $10,000 total in foreign accounts to report those accounts on their tax return. Those that fail to do so may face an audit, substantial financial penalties, criminal prosecution, and imprisonment. In an effort to find such accounts the U.S. Department of Justice (DOJ) recently announced a tax deal with Switzerland.

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Timing and Asset Considerations under the OVDP

As essential part of determining your Offshore Voluntary Disclosure Programsubmission is calculating the OVDP disclosure period. As defined by the IRS, the voluntary disclosure period consists of the most recent eight years for which the due date has already passed. Each disclosure must contain an eight-year period. For example, if a taxpayer makes a disclosure prior to the due date for 2013, the voluntary disclosure period will be 2005 through 2012.

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Taxpayer Penalties Under OVDP

Under the Offshore Voluntary Disclosure Program, taxpayers have the opportunity of making a voluntary disclosure of all their offshore financial accounts and assets to the IRS. In exchange for making the voluntary disclosure, the IRS offers taxpayers a decreased risk of criminal prosecution and assorted fines and penalties. In order to validly take part in the program, the taxpayer’s disclosure must be timely, complete, and accurate.

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Streamlined Filing Compliance Procedures Under OVDP

In addition to the formal Offshore Voluntary Disclosure Program, the IRS offers Streamlined Filing Compliance Procedures for certain qualified taxpayers. The Streamlined Procedures apply to non-resident non-filer taxpayers. On June 18, 2014, the IRS announced new changes to the Streamlined Procedures which will allow more taxpayers to qualify as well as ease the process for qualifying applicants.

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How to Complete the Pre-clearance Phase of the OVDP

Before a taxpayer even makes a submission to the Offshore Voluntary Disclosure Program, he or she must successfully complete a pre-clearance phase. In this pre-clearance phase, the taxpayer or taxpayer’s representative presents certain information to the IRS Criminal Investigation division and awaits a “pre-clearance” letter indicating the taxpayer’s eligibility for participation in the program.

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Case Resolution Under the IRS OVDP

What Options Are Available for Case Resolution Under OVDP?

At the end of the Offshore Voluntary Disclosure Program process, the IRS will attempt to come to a closing agreement with the taxpayer. In order to close the OVDP process, the taxpayer must agree to come to a closing agreement with the IRS on IRS Form 906, “Closing Agreement on Final Determination Covering Specific Matters” (1).

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History of the Offshore Voluntary Disclosure Program

The IRS Criminal Investigation division has a longstanding practice of considering a taxpayer’s timely, accurate, and complete voluntary disclosure in determining whether or not to pursue criminal prosecution against the taxpayer. Beginning in 2009, the IRS established a series of programs specifically designed to allow tax payers to voluntarily disclose the existence of foreign financial accounts in return for some protection against prosecution for criminal tax evasion.

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