IRS May Offer Penalty Relief Under OVDP

The IRS continues to collect revenue under its Offshore Voluntary Disclosure Program (OVDP).  To date it has brought in $5 billion in revenue.  The penalties are varied and can be severe.  Recently, the IRS implemented a new streamlined filing compliance procedure for certain non-residents.  The IRS understands that there are certain U. S. taxpayers who live abroad and also dual citizens who have just recently learned of their filing obligations, namely failing to file Reports of Foreign Bank and Financial Accounts (FBARs) but seek to be in compliance.

This new procedure is intended for low compliance risk taxpayers. The IRS reserves the right to determine if the taxpayer is low compliance risk, if the submitted return and attached forms indicate a total tax due of $1,500 or less, the taxpayer will be considered low compliance risk and be eligible for the streamlined process.

Taxpayers with dual citizenship or U.S. citizens living abroad who have recently discovered their filing obligations as they relate to foreign bank accounts should be aware of this process. There are a number of penalties that can be assessed against taxpayers, some extremely high. Even for non-willful failure to file, the penalty can be as high as $10,000 per account.  To pile on even more, the penalty can be assessed per year.

If you are a U.S. citizen living abroad or a dual citizen, have foreign bank accounts and have not reported them in your U.S. Federal tax returns, schedule your free consultation by calling (480) 888-7111 [or submit a web request here].