The Offshore Voluntary Disclosure Program (OVDP), which allowed individuals who ‘wilfully’ failed to file a US tax return an avenue to become compliant by paying some penalties and avoid the threat federal prosecution, is due to end on 1 September.
However, a separate Streamlined Program for individuals who were not aware of their requirement to file a tax return either at all or just certain foreign financial forms will continue for now. Applicants under this programme, which was introduced in 2014, have to be able to demonstrate how their circumstances lead to not having a wilful intention to not file.
CRS effect
The Inland Revenue Service (IRS) amnesties for overseas US citizens were introduced in January 2013 alongside Fatca (the Foreign Account Tax Compliance Act), which itself subsequently led to the implementation of Common Reporting Standard (CRS) globally.
While early adopters of CRS produced their first reports in September 2017, the last countries to exchange information will be in September 2018 when the OVDP program is due to close.
Andrea Solana, head of advanced planning for Maseco Private Wealth, told International Adviser: “The aim of these (amnesty) programs was to get US taxpayers back into the system with more of an interest in disclosure as opposed to harshly punishing late or non-filers with very high penalties.
File your taxes
“However, it was never the intention for these programs to remain open indefinitely. And, the IRS announced earlier this year that the OVDP option to those who wilfully failed to file will cease to be available from September 2018.
“This increases the immediacy of filing for taxpayers who cannot justify that they had a ‘non-wilful’ neglect in filing US tax returns. The Streamlined program will remain in place for the time being but the opportunity to participate in this too will almost certainly end at some point in the future.
“So, any taxpayers who have yet to come forward should seriously consider doing so while the potential for penalties and prosecution is abated.”
