Oftentimes taxpayers fail to report foreign accounts on their U.S. tax returns, especially when they aren’t living in the U.S. Whether this is done intentionally or not, these taxpayers are at risk of facing felony prosecution.

Luckily, the IRS is now offering guidance on its Offshore Voluntary Disclosure Program, or OVDP, and a new voluntary compliance program for United States taxpayers living overseas who may find themselves with undeclared foreign assets. Unlike 2009 OVDP and 2011 OVDP, there is no set deadline for taxpayers to apply at this time. Please keep in mind that terms of this program change at any time and the program will be available to taxpayers until further notice.

The newly reopened OVDP enables taxpayers to get current with their U.S. taxes by reporting any hidden offshore assets, without being at risk for prosecution. Participants must submit both original and amended tax returns and include a payment for back taxes for up to eight years as well. A payment for any accuracy-related and/or delinquency penalties must also be included.

In addition, a new program for “low compliance risk” will be available to U.S. taxpayers living abroad, such as dual citizens, who have simple returns and owe less than $1,500 in tax for any covered year. Participants must file delinquent tax returns for the past three years and file FBARs, or Reports of Foreign Bank and Financial Accounts, for the past six years. After the IRS declares a participant qualifies as “low compliance risk,” they will not penalize or pursue them any longer. This program, however, does not provide protection from criminal prosecution.

If you find yourself in a similar situation and need advice concerning your specific circumstance, call 877-829-3535 and let us help you settle any foreign account issues with the IRS.