Persons living in the United States hate IRS and their tax regulations like anything. They are persistent and when they get you into their sights, it can be practically impossible to get away. If you have been affected by the IRS Offshore Voluntary Disclosure Initiative (OVDI), it can be a difficult problem and many individuals don't know what direction to go after they are contacted by the Internal Revenue Service. An OVDI lawyer can be very helpful in getting you through this situation safely and securely. Sometimes OVDI is referred as OVDP in which 'P' means procedure but both describes the same concept. The folks who normally make use of this program are dual citizens, expatriates, and foreign nationals.
The Offshore Voluntary Disclosure Initiative (OVDI) was introduced in the year 2009 to help the tax payers who holds undisclosed overseas bank accounts to voluntarily disclose the details to the Internal Revenue Service. A person would need to pay out the required taxes with interest together with 20 percent penalty on the highest balance they have on their offshore accounts. In 2009, roughly 5000 citizens made use of this program. In this way, you not only safeguard your family and property but in addition prevent criminal prosecutions. When you've got more than $10000 in your offshore banking accounts, you must report it to the IRS.
It was forced to make modifications in 2011 considering that the penalty structure was exactly the same for those who intentionally didn’t pay out their taxes and those who made a real sincere mistake. The IRS launched an opt-out procedure in the 2011 OVDP. The FBAR penalty structure was changed where instead of 20 %, you have to pay out 25 percent charges on the highest balance . Also the IRS began to look at an 8 year look- back period as opposed to 6 years in the 2009 OVDP. For those who really made a mistake or simply did not realize that you had to pay for taxes or tell the IRS about the undisclosed bank account, you could argue for a FBAR penalty. When it was proven that your scenario had realistic cause, the penalty would fall down to 5 %.
IRS increased the FBAR penalty once again to 27.5% while in the 2012 OVDI. This huge fine would make citizens to search for alternative ways for instance ‘quiet disclosures’. But a person should not go for it because the justice department can trigger criminal proceeding against people that attempt to use it. A good tax firm will tell potential clients that it's worth to come clean as it will prevent all the complications though it could be expensive. By May of the year 2012, almost 2500 OVDI’s was already submitted and the IRS is extremely bogged down by volume of OVDP reports and also sheer number of tax related court cases. So IRS might make mistakes while imposing penalties on you or possibly become unreasonable with your reporting. An OVDI attorney is definitely the only individual you can rely to work you through the OVDI process.
If you are planning to opt out from the OVDI program, check the various options that is available prior to making a decision. Don't forget that it's good for both you and your assets when you come clean. The IRS doesn't take this matter lightly and the penalties could be very expensive. Even a legal action might be taken against you. Have an OVDI legal professional to guide you where you need to go on this difficult time.