Offshore Voluntary Disclosure Program, also known as OVDP, is a program designed specifically for taxpayers who wish to voluntarily disclosure their foreign assets or investments to the IRS. Originally, OVDP was designed to help aid taxpayers with exposure to foreign accounts. This program guides taxpayers every year to disclose accounts so that they aren’t subject to potential civil penalties or even criminal liability. The Offshore Voluntary Disclosure Program reminds taxpayers that they must pay taxes on all their assets, even those that are in foreign accounts.
But why disclose your foreign assets willingly? In simple terms, it keeps the IRS from hounding you for information and subjecting you to stressful audits. OVDP is a means of legally disclosing your financial gains, investments, and funds without being subject to criminal prosecution later on down the road.
If you need to disclose foreign assets voluntarily before the Offshore Voluntary Disclosure Program is discontinued by the IRS, you’ll need to follow standard FBAR compliance; this means that any foreign asset totaling over $10,000 in value throughout a taxable year is subject to electronic reporting of Form 114 through the FINCEN’s BSA-E filing system. While reporting foreign assets can be tricky, reporting it voluntarily is the best option to prevent an IRS notice for unlawful nondisclosure of funds.
Should you have any questions about the OVDP or FBAR rules, regulations, forms, and guidelines, contact the Law Offices of Christy Lee, P.C., and we’ll help you navigate the process. You may even get to see Toby in the office when we meet!