OVDP and Voluntary Disclosures for Virginia ResidentsOffshore Account Update
Posted in on September 30, 2019
Virginia residents who have not timely disclosed their foreign financial assets to the Internal Revenue Service (IRS) have one less option than they did a year ago. This is because the IRS’s Offshore Voluntary Disclosure Program (OVDP) ended on September 28, 2018. While there is a new program that has taken the place of the OVDP, this new program is different from the OVDP in many important respects. As a result, anyone needing to catch up on their foreign financial disclosures should speak with a Virginia OVDP lawyer as soon as possible.
The IRS’s Streamlined Filing Procedures Have Replaced the OVDP
The successor to the OVDP is the IRS’s streamlined filing program. However, the streamlined filing program is not a direct replacement for the OVDP. Certain taxpayers who were eligible under the OVDP will not be eligible to submit a streamlined filing; and, depending upon the specific circumstances involved, the streamlined filing program may or may not offer protection that is equal to or greater than that offered by the OVDP.
“Non-Willful” Failure: A Key Distinction Between the OVDP and Streamlined Filing
One of the most-important differences between the OVDP and the IRS’s streamlined filing procedures is that the new streamlined procedures are only available to taxpayers who have committed “non-willful” disclosure violations. Taxpayers must certify the non-willfulness of their delayed filing at the time of submission; and, if the IRS determines that this certification is fraudulent or invalid, then it can deny streamlined protection. Likewise, if a streamlined filing fails to satisfy any of the other requirements for eligibility, the IRS can deny protection and assess full penalties for all unremedied violations.
With this in mind, prior to submitting streamlined filings, Virginia residents must consult a Virginia OVDP lawyer to make sure that their submissions will not do more harm than good. Some residents who were eligible for protection under the OVDP will not be eligible for protection under the streamlined filing program.
Form 8938 and FBARs: Proactive Offshore Disclosure Compliance
Of course, the most-effective way to avoid IRS penalties is to timely and accurately disclose your foreign financial holdings. With respect to IRS compliance, this involves submitting Form 8938 (and potentially various other forms as well). If you own foreign financial accounts, then proactive compliance may also involve filing a Foreign Bank Account Reporting (FBAR) form with the Financial Crimes Enforcement Network (FinCEN).
If your foreign financial holdings exceed the following thresholds, then you may be required to file Form 8938 and disclose your accounts to FinCEN:
- IRS Form 8938 – A total value of more than $50,000 on the last day of the tax year or more than $75,000 at any time during the year for individual taxpayers, or a total value of more than $100,000 on the last day of the tax year or more than $150,000 at any time during the year for married taxpayers filing jointly.
- FBAR (FinCEN Form 114) – A total value of more than $10,000 at any time during the calendar year for all U.S. taxpayers.
Speak with a Virginia OVDP Lawyer in Confidence
If you have questions or concerns about your voluntary disclosure obligations, we encourage you to contact us promptly for a confidential consultation. To speak with Virginia OVDP lawyer Kevin E. Thorn, Managing Partner at Thorn Law Group, as soon as possible, call us at 703-752-3752 or inquire online now.Share This Post