OVDP

During the most recent iteration of the formal voluntary disclosure program--the OVDP, which was in effect from July 1,2014 to September 28,2018--a taxpayer making an offshore voluntary disclosure would need to file eight years of amended tax returns and FBARs and pay a fixed miscellaneous offshore penalty of 27.5% of the aggregate value of the previously unreported foreign accounts, sometimes increased to 50% depending upon the banks at issue in the voluntary disclosure.

One attachment is required for each foreign financial account that the OVDP applicant controls or is the beneficial owner of.

Under the OVDP, a disclosure is considered timely only if it is made before: (1) the IRS has initiated a civil examination or criminal investigation of the taxpayer, or has notified the taxpayer that it intends to do so; (2) the IRS has received information from a third party (e.g., an informant, other governmental agency, or the media) alerting it to the specific taxpayer's noncompliance; (3) the IRS has initiated a civil examination or criminal investigation which is directly related to the specific liability of the taxpayer; or (4) the IRS has acquired information directly related to the specific liability of the taxpayer from a criminal enforcement action.

Furthermore, in a recent IRS announcement, revenue agents will begin taking a closer look at those individuals who initially wished to participate, but were not accepted into the OVDP. The OVDP Declines-Withdrawals Campaign addresses OVDP applicants who applied for pre-clearance into the program but were either denied access to OVDP or withdrew from the program of their own accord.

There is no deadline for applying for OVDP, but taxpayers should be aware that OVDP can be expensive, and it can trigger state/local tax audits.

* OVDP 1.0--The IRS has historically allowed taxpayers to voluntarily disclose any violations or oversights, regardless of intent, before the IRS identifies such violations, in exchange for reduced or at least mitigated civil and/or criminal consequences.

Realizing that the previous OVDP rules' 27.5% penalty may have been too harsh or restrictive for some taxpayers, the IRS expanded a streamlined reporting program to apply in more situations.

Gregory Dean: Under the 2009 OVDP, non-compliant taxpayers had to file six years (2003 to 2008) of amended or delinquent tax returns and an annual Report of Foreign Bank Accounts (FBAR) if applicable.

2Y OVDPs received just two bids totalling UAH250mn at the market level yield of 10% (not 9% presumably targeted by the MoF).

On March 13, the IRS announced that it will close the Offshore Voluntary Disclosure Program (OVDP), effective September 28, 2018.