According to Accounting Today, the Internal Revenue Service is encouraging taxpayers with previously undeclared foreign bank accounts to enter into its Offshore Voluntary Disclosure Program, but there are now choices between a new streamlined version of the OVDP and the regular program that will require careful consideration and advice from your Maryland tax attorney.The program has been available to anyone except those who are already under IRS audit, those whose unreported income came from illegal activity, those who are promoters of the use of offshore tax avoidance schemes and others whose names IRS already knows. The original 2009 version of the OVDP required a 20 percent penalty for the highest balance over the prior six years. Additionally, it demanded a 20 percent accuracy penalty on the tax due plus interest on the tax. There is a guarantee of no criminal prosecution if you are permitted entry into the program.
There are two types of OVDP to consider. The streamlined filing option for non-willful taxpayers. They are only required to pay 5% of the highest balance over the past three years. Under the modified program, all taxes, penalties, and interest must be paid at the time of submission. The 2012 revamped regular program requires 27.5% of the highest balance be paid over the past eight years. It is open ended with no specific end date and can close at anytime without warning. The ultimate decision of whether to enter into either the streamlined OVDP or the regular OVDP should be made after careful analysis of all the factors specific to your situation. Legal counsel is a must since there is the potential of criminality involved.