According to the Service, the last series of voluntary programs that started in 2009 has resulted in more than 45,000 voluntary disclosures from individuals who have paid approximately $6.5 billion in back taxes, interest, and penalties. See “IRS Offshore Voluntary Disclosure Efforts Produce $6.5 Billion; 45,000 Taxpayers Participate,” (June 2014).

The Service is continuing to motivate taxpayers to disclosure offshore accounts and has recently made it easier to do so. The changes include an expansion of the streamlined filing compliance procedures announced in 2012 and important modifications to the 2012 Offshore Voluntary Disclosure Program (OVDP).

The expanded streamlined procedures are available to a wider population of U.S. taxpayers living outside the country and for the first time, to certain U.S. taxpayers residing in the United States. The changes include:

  • Eliminating a requirement that the taxpayer have $1,500 or less of unpaid tax per year;
  • Eliminating the required risk questionnaire;
  • Requiring the taxpayer to certify that previous failures to comply were due to non-willful conduct.

See IRS, “IRS Makes Changes to Offshore Programs; Revisions Ease Burden and Help More Taxpayers Come into Compliance,” (June 18, 2014).

Compliance 

U.S. citizens, resident aliens and certain nonresident aliens are required to both report their worldwide income from all sources including foreign accounts and pay any accompanying taxes. Most affected taxpayers need only fill out and attach a Schedule B to their tax returns.

Part III of Schedule B asks the taxpayer if they have any foreign accounts. Certain taxpayers may also have to fill out and attach to their return Form 8938, “Statement of Foreign Financial Assets.” Form 8938 is only required if the aggregate value of those assets exceed certain thresholds.

See also IRS “Offshore Voluntary Disclosure Program Frequently Asked Questions and Answers

Posted by Theodore H. Waggner, Esq., Associate Editor, Wealth Strategies Journal