Resolution of Back Taxes in Case of Tax Evasion

Posted on July 18, 2022

Resolution of Back Taxes in Case of Tax Evasion

Recently, the U.S. government took aggressive steps to counter tax evasion by bringing in more transparency with foreign countries. The U.S. made agreements with various countries under the Foreign Account Tax Compliance Act (FATCA) to initiate the exchange of American taxpayers’ financial information. Along with making efforts to bring down tax evasion, the IRS is also making it easier for tax evaders to resolve their back taxes.

Resolution of Back Taxes

It is an important time for taxpayers who have hidden assets and income to report their hidden income and assets to the IRS using the Offshore Voluntary Disclosure Program (OVDP). This program allows taxpayers to resolve their tax debt without paying heavy penalties, and minimizes the risk of imprisonment.

The IRS begins and ends an OVDP randomly, so taxpayers who want to resolve their tax evasion and pay their tax liability should consider OVDP.

2013 Offshore Voluntary Disclosure Program

The IRS began its open-ended OVDP program in 2012, which is still running. It is an opportunity for taxpayers to become current with their tax returns. Even though the current OVDP has a higher penalty rate than the previous programs, it offers benefits that ease the process of resolution.

Unreported income and assets in foreign accounts can be reported to the IRS under OVDP to avoid possible criminal prosecution and heavy fines. As the IRS can close OVDP any time, taxpayers must make efforts to resolve their back taxes as soon as possible.

IRS Back Taxes Payment Plans

Taxpayers can resolve their tax debt through various tax debt payment plans. For tax debt amounts that cannot be paid in full, the IRS has debt payment plans, such as an Installment Agreement or the Partial Payment Installment Agreement that allow them to pay the debt in payments.

Before calling the IRS, it is advisable to contact a tax service that can help minimize the tax liability and help resolve the debt affordably.