The Purpose of the Offshore Voluntary Disclosure Program

Mar 16, 17 The Purpose of the Offshore Voluntary Disclosure Program

Justice and fairness are values that are important to most people. No one wants to see someone suffering unnecessarily; that’s a strong conviction for most people. But just as strong is the conviction that no one should get away with doing wrong or harmful things. Most people are passionate about others reaping what they sow, and that can sometimes cause us to jump to conclusions about very complicated situations.

The Offshore Voluntary Disclosure Program is a program that many people don’t fully understand, and therefore don’t fully support. Many see it as a way out for those who have chosen to engage in unlawful behavior when, really, the goals of the program are much more complex. Before you decide you are not in favor of the Offshore Voluntary Disclosure Program, here are a few things you might want to consider. They may change your mind, or they may not. Either way, having the complete information will provide you with the opportunity to make a more informed decision about how you feel regarding the program.

What is the Offshore Voluntary Disclosure Program?

The Offshore Voluntary Disclosure Program provides an outlet for people who have previously failed to report their foreign income or assets to do so now, retroactively. Participants in the program are people who have knowingly failed to disclose rather than people who mistakenly failed to disclose, so someone whose accountant falsely told them that everything was filed appropriately would not be eligible; they have other avenues to rectify their situation.

Participants in the program may file or amend up to eight years’ worth of tax returns, and they must pay all taxes, interest, and penalties on the amounts claimed. There may be additional penalties imposed, and participants will be required to answer some questions.

Does it Protect Criminals?

The issue many people have with the Offshore Voluntary Disclosure Program is that they feel it protects people who have violated the law by deliberately choosing to ignore their obligation to report their foreign income and assets. However, this may be an unfair assessment of the matter; the program actually operates in a way that the justice system tends to.

When a trial of any kind is brought before the courts, it is never cut and dry. There is always negotiating that takes place. This can include a plea bargain, where the charge—and therefore the sentence—is lowered in exchange for an admission of guilt. And when sentencing takes place, the judge always looks at mitigating factors and may reduce the sentence based on things like a guilty plea or remorse. Even something as simple as a traffic ticket fine is often reduced if the defendant agrees not to fight the charge.

So yes, the Offshore Voluntary Disclosure Program does provide some relief to those who have violated certain tax laws, but not without anything in return. Participants have to admit guilt and make the situation right. The program is the same sort of negotiating tool often employed by the justice system to get results.

What are the Benefits?

One of the reasons many people initially disagree with the Offshore Voluntary Disclosure Program is that they only see one side of it. They see people who have violated the law getting their consequences reduced, and that’s it.

But that’s only one side of the picture. The other side is that it ultimately brings more people in line. Without the risk of jail or other legal ramifications, more people are likely to step forward and admit guilt, and—more importantly—pay back what they owe. Being given the opportunity to come clean also means that participants won’t have to keep committing fraud to cover their tracks. It might not feel like a moral victory for some people, but it truly does rectify the problem. Having tax money paid back is more important than having someone thrown in jail; it keeps the tax system fair, and it prevents honest people from having to carry the system on their own.

Committing international tax fraud is wrong, but being given a second chance to make things right isn’t such a bad thing. The Offshore Voluntary Tax Disclosure Program does not exist to give a break to wealthy tax evaders, but rather as a means of collecting what is owed and seeking justice.