2012 Offshore Volunteer Disclosure Initiative (OVDI)
2012 OVDI program is the third offshore volunteer disclosure program similar to 2011 and 2010 OVDI program. Program has been put in place by the US Govt. So that US residents can come clean while IRS continues working on a wide range of tax issues both within the country and internationally.
With this success of 2011 and 2010 OVDI program, it is quite clear that US residents have MBA’s (massive bank account’s) in foreign countries. In a recent press release, IRS acknowledged that they have collected over $5 billion dollars from OVDI so far, but only 33,000 residents have taken advantage of this program.
Who should apply for the OVDI or Offshore Volunteer Disclosure Initiative?
US citizens or residents you may have missed the deadline to file the FBAR (foreign bank account reporting) or any other deadline to comply with US Tax Laws regarding the disclosure of foreign bank account such as TDF 8938. Failure to file such kinds of foreign disclosure’s can result in huge penalties including criminal charges.
OVDI Scheme allows individuals and businesses to apply for relief from such penalties and criminal charges. However, this program does require you to file amended tax returns and prior years foreign disclosure’s. In addition to filing the paper work, you must also pay some penalty. IRS may also require you to pay the interest and penalty on all back taxes due.
Penalty under 2012 OVDI Program
2012 offshore volunteer disclosure initiative penalty framework requires individuals to pay a penalty of up to 27.5 percent of the highest aggregate balance in foreign bank account or the value of foreign assets during the last eight tax years. Accounts with maximum balance of $75 thousand dollars need to pay the reduced penalty of 12.5 percent.
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