FBAR Amnesty Program
FBAR Amnesty Program: When a U.S. person is out-of-compliance for unreported foreign accounts and assets, it can be unnerving feeling. The internet is littered with fear-mongering and scare mongering websites making you believe you are going to jail forever if you are out of compliance.
Foreign Account Amnesty is a shorthand way to describe the several IRS programs taxpayers may use in order to reduce, minimize or avoid the change of being hit with FBAR Violation Penalties.
Let’s review the FBAR Amnesty Programs:
Some of the more common programs, include:
- Voluntary Disclosure Program (VDP or New OVDP)
- Streamlined Offshore Procedures
- Streamlined Domestic Program
- Streamlined Foreign Program
- Delinquent International Information Return Program
- Delinquent FBAR Program
IRS FBAR Amnesty Program Options
We will briefly summarize these FBAR Amnesty Programs, and provide you links to research more detailed information on our website.
Voluntary Disclosure Program (VDP or New OVDP)
The Voluntary Disclosure Program of the IRS, aka VDP or “New OVDP” (for offshore matters) is the traditional program that has been available to Taxpayers for many years. The program is generally used by Taxpayers who cannot certify under penalty of perjury that they are non-willful.
The program was recently updated.
Streamlined Offshore Procedure
In 2014, the IRS developed the stand-alone streamlined procedures. These procedures are used to assist Taxpayers residing in the U.S. or abroad, with offshore amnesty. The Streamlined procedures require Taxpayers to certify under penalty of perjury that they are non-willful.
In exchange, Taxpayers pay significantly less penalties – and may even qualify for a penalty waiver.
Streamlined Domestic Program (SDOP)
The Streamlined Domestic Program is reserved for non-willful U.S. residents who filed original tax returns timely. The program reduces the offshore penalties from upwards of 50% annually (to a 100% maximum) all the way down to 5%.
And, certain assets are excluded from the penalty computation, such as RRSP.
Streamlined Foreign Program (SFOP)
The Streamlined Foreign Program is reserved for non-willful foreign residents. Filers do NOT have to had filed timely original tax returns. Moreover, ALL tax and asset/account penalties are completely waived.
Delinquent International Information Return Program
The Delinquent International Information Return Program is an alternative to making Streamlined Disclosure. The process is less formalized (for better or for worse), and penalties are waived.
This procedure is primarily used by non-willful U.S residents who have no unreported income.
Delinquent FBAR Program
When the only issue involves the non-filing of the FBAR, the FBAR Delinquency Procedures may be available.
Like DIIRSP, these procedures are a less formalized alternative to the Streamlined Procedures.
This procedure is also used by non-willful U.S residents who have no unreported income, and penalties are waived.
Reasonable Cause is an alternative to Streamlined Procedures.
It is primarily used by U.S. residents (or foreign residents who do not qualify for Streamlined) who are seeking to avoid the SDOP 5% penalty – but do not squarely meet the requirements for Delinquency Procedures.
We Specialize in Streamlined & Offshore Voluntary Disclosure
Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure and FBAR Amnesty Programs.
Contact our firm today for assistance.