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IRS to Shut Down Offshore Voluntary Disclosure Program

Transcript of the above video:

In this video today as the title suggests, we are going to be discussing a little bit about US Expat tax issues for those Americans who are abroad.

Very interesting article recently came to my attention through the expatnetwork.com, that is expatnetwork.com. The title of the article is “US Offshore Voluntary Disclosure Program to Close”. Quoting directly from that article, "the US IRS has announced that the Offshore Voluntary Disclosure Program, OVPD, will close in September, 2018. The OVDP was set up to allow US expats with potentially serious offshore compliance issues to avoid criminal prosecution and cap any exposure to penalties. The IRS indicated that the reason was "the significant decline in the number of taxpayers participating.   There has been a decline from 18,000 in 2011, to 600 in 2016, according to an article in the National Law Review".  Quoting further "Where the original compliance was not willful, the streamlined filing compliance procedure and the delinquent FBAR and delinquent International Information returns filing procedures will continue to be available”. Acting IRS Commissioner David Kautter stated that “Taxpayers have had several years to come into compliance with US Tax Laws under this program. All along we have been clear that we will close the program at the appropriate time and we have reached that point. Those who still wish to come forward have time to do so".  And that last part is very important. There is still as of the time of this filming there is still a window to get in there so those that feel that they may have an issue with respect to you US  tax compliance are strongly, strongly, strongly recommended by me, and I think pretty much any other tax professional is going to agree, get in there and get in while the window is still open and get this dealt with and move on with your life because you know, having to deal with issues pertaining to tax compliance and possible criminal prosecutions associated therewith is simply not something one wishes to deal with, I don't think at all. This should also be taken in light of the fact that there have been other changes with respect to rules regarding tax, tax compliance and the ramifications for US citizens and lawful permanent residents abroad. Less to the point of lawful permanent residents for now, although there are other videos specifically there's a video regarding I-407 surrenders for US green cards abroad which goes into this a little bit more. Specific to US citizens, and we have done another couple of videos on this topic, but specific to US citizens, this announcement should also probably be viewed with substantial seriousness especially in light of the fact that the IRS and the Department of State have both given notice that they will begin not only certifying delinquent taxpayers but also the Department of State will be revoking passports for those who have over $50,000 in accumulated, essentially debt to the IRS, accumulated tax obligations to the IRS in the form of interest, penalties, fees etc., So if one owes the IRS $50,000 or more, one can have their US passport revoked. Now to be clear this would even happen abroad. this could happen at a US Embassy when one is dealing with a US Embassy and they have to present their passport and it comes to find out that the US Embassy checks it and, "oh my gosh you are 50,000 delinquent in taxes, it has been certified by IRS . We are the Department of State we are going to take that passport right here and now" and in those circumstances that individual is only going to be given temporary documentation in order to travel back to the United States and deal with the matter. The other thing that can happen is one will be precluded from having a passport issued in order to leave the United States. So these issues should be viewed in light of the fact that they are increasingly more stringent penalties associated with non-compliance with various tax policies and rules and regulations, as well as now they are even starting to close down some of the amnesty programs that were there for those  who might not be in compliance to go ahead and get in compliance.  

So again, September 2018, apparently this is the deadline, after that folks that aren't in compliance may have some serious issues down the road. One final thing to take into consideration as mentioned when quoting that article. The streamline processing and basically all of those mechanisms that are used for those who are non willfully in sort of non-compliance for lack of a better term with IRS, those programs are going to remain but that being said it is not a foregone conclusion that they are going to remain forever. Moreover, those who have really serious tax arrears or tax issues are strongly advised to deal with them before September 2018, for fear of future, probably more harsh penalties.