CHICAGO: Internal Revenue Service (IRS) has announced closing of Voluntary Disclosure scheme launched originally in 2009 as an alternative to Overseas Voluntary Disclosure Initiative (OVDI) and the OVDP modified from time to time till 2014, is now proposed to be closed on September 28, 2018.
This was announced by the IRS on March14, 2018. The agency had launched Overseas Voluntary Disclosure Program (OVDP) whereby Tax Payer could declare their undisclosed income and assets by paying penalty of 27.5% on the maximum financial balances held over last 8 years.
OVDP also required revision of tax returns and filing of FBAR Returns for 8 years and other relevant returns under FATCA , PFIC , etc.
IRS has cited the reason of significant decline in participation in recent past after OVDP being successful initially. IRS has informed that Tax Payers wishing to participate should make complete disclosure confirming all the requirements which should be received by September 28,2018.
IRS has also clarified that Streamlined Filing Compliance Procedures (SFCP) continues to be available for Tax Payers who have undisclosed offshore income and financial assets not declared in USA out of ignorance and negligence.
It has been once again clarified that Tax Payer who have previously undisclosed Overseas income and assets simply file tax return showing overseas income from this year without opting for Streamlined Procedures commonly referred as ” Quite Disclosure ” will be reviewed and subject to civil and criminal penalties and once again pronounced that information received under FATCA from the networking of Inter-Governmental Agreements between USA & 113 countries will be utilized and enforced making it difficult evade tax by hiding offshore.
Now that the information by Banks , Mutual Funds , Insurance Companies and Depositories in India and other 112 countries is also submitted to IRS it would be appropriate for Tax Payer who have ignorantly and negligently not declared Indian / Overseas income and assets to opt for Streamlined Procedures which requires :
1. Payment of meager 5% penalty on maximum financial amongst last 6 year ends
2. Revision of Fed Tax Returns for payment of tax on Overseas Income for 3 years
3. Submission of FBAR Returns for 6 years and
4. Declaration of non wilful conduct.
Copy of State Bank of India letter informing account holders about their accounts being reported to USA and link to HDFC Bank stating US accounts being reported are posted herein for perusal whereas HDFC Bank notification re: USA Residents accounts being disclosed can be found at http://femaonline.com/cmsuserfile/CBDT%20Letter.pdf
https://www.hdfcbank.com/htdocs/common/FATCA-TnCs.htm
RAJESH DHRUVA
