Many people have heard of the Offshore Voluntary Disclosure
Program (OVDP), but few are aware of whether or not the program is the best
choice for filing a disclosure under their specific circumstances.
The following information can help determine whether or not
you the OVDP is the right program for you and provide the guidelines to
consider as you move forward with the process as quickly and easily as
As a program specifically designed for people with potential
exposure to criminal liability and/or civil penalties, the OVDP offers taxpayers
who have unreported foreign financial accounts and have been willfully
non-compliant with the opportunity to avert criminal prosecution and/or significant
According to the IRS, taxpayers who have legal authority
value in unreported
OVDP assets, which are listed in (FAQ 35) and satisfy the requirements
of IRM 184.108.40.206 are eligible to apply for the IRS Criminal Investigation’s
Voluntary Disclosure Practice and the OVDP.
The OVDP program applies a miscellaneous offshore penalty of
27.5% of your highest foreign account balance. Even though 27.5% can seem high,
it is worth accepting in order to avert criminal prosecution. Further
information and details regarding the offshore penalty framework and can be
When filing a disclosure, time is of the essence. The
disclosure must be received before the following occurrences:
The IRS begins a civil or criminal investigation
The IRS obtains news from a foreign bank regarding the
possibility of noncompliance.
If you are unsure if you meet these standards, it may be a
good idea to request a preclearance letter from the IRS
Forms you may need to assemble your submission
Form 114, the Report of Foreign Bank and Financial
Collection Information Statement for Wage Earners and Self-Employed
Collection Information Statement for Businesses
872, Consent to Extend the Time to Assess Tax
of Attorney Form for the Offshore Voluntary Disclosure Initiative
Documents you must
review and/or complete
Complete Form 14452, Foreign Account or Asset
Voluntary Disclosure Letter and Attachment.
and sign the Consent
to Extend the Time to Assess Civil Penalties Provided by 31 U.S.C. 5321
for FBAR Violations.
for Completing Consents