The Voluntary Offshore Disclosure Program (OVDP), a program that lets tax cheats come clean, has led the IRS to collect $5 billion dollars from people hiding their money in their offshore accounts since 2009.The OVDP program was created with the goal of making it easier for tax cheats to come forward and pay taxes on their offshore assets. Since the program first launched in 2009, 33,000 people have agreed to square up with Uncle Sam.
When a taxpayer discloses their offshore assets to the IRS they must pay back taxes, interest and late charges for offshore holdings over the last eight years. On top of that, they face a 27.5 per cent penalty on however much they’ve been storing in their offshore vehicles.
Despite the 27.5 per cent penalty, however, the program still sounds a lot better than getting caught by the IRS normally. Usually, offshore tax cheats are hit with fines that could reach 75 per cent of their holdings.
Even worse, cheats could be criminally prosecuted for tax evasion, fraud or failure to file, according to the IRS. These charges could subject them to jail terms ranging from one to 10 years, plus a fine of $250,000 to $500,000.
Unlike in previous years, the IRS has not set a definite deadline for this year’s program. But don’t think that means you’re getting off the hook—it could announce the end of this year’s program at any time.