The IRS is set to end its Offshore Voluntary Disclosure Program (OVDP) in September, closing a window of opportunity that allows U.S. taxpayers to come forward and disclose offshore assets with reduced penalties and protection from criminal liability.

The program, which initially launched in 2009 and has since seen several iterations over the past decade, experienced early success. More than 56,000 taxpayers have participated in the OVDP, resulting in recovery of more than $11.1 billion in back taxes, interest and penalties. However, the program's participation rates have dropped steadily since its peak in 2011.

A wind-down of the OVDP does not signal an end to the IRS's priority to crack down on offshore tax noncompliance and evasion. But it does indicate a shift in focus to alternative efforts that are proving more effective. These include a combination of taxpayer education, whistleblower programs, expanded information resources (including those with foreign governments through efforts like FATCA), greater use of data analytics, and - importantly - civil examination and criminal prosecution.

The IRS is advising taxpayers now of the program's ultimate end effective Sept. 28, in hopes that this provides sufficient time to U.S. taxpayers who wish to leverage the program. Further, in recognition that everyone's tax situation - including their offshore tax reporting - varies case by case, the IRS has left a few options for taxpayers to voluntarily come forward to disclose issues with past filings.

The IRS will continue offering its Criminal Investigation Voluntary Disclosure Program and its Streamlined Filing Compliance Procedures Program. The latter, used by taxpayers who may have been unaware of their filing obligations, doesn't protect participants from possible criminal prosecution, however, and according to the IRS, it could eventually end as well. Further, effective Sept. 28, a taxpayer who makes a voluntary disclosure through the Criminal Investigation Voluntary Disclosure Program is no longer eligible to use the Streamlined Filing Compliance Procedures Program, and vice versa.

Other avenues that will remain intact are the procedures for delinquent FBAR or international return submissions.

As the options for voluntary disclosure narrow, it's important that U.S. taxpayers connect with their tax advisors to ensure compliance with offshore tax reporting obligations. For taxpayers looking to take advantage of the OVDP, completed offshore voluntary disclosures that meet 2014 OVDP FAQ 24 reporting requirements must be received or postmarked by Sept. 28, 2018. The IRS will not accept partial, incomplete or placeholder submissions.

The IRS continues to expand its reach when cracking down on offshore tax evasion, turning its enforcement attention to a technology that is taking the financial industry and its regulators by storm: Bitcoin and other cryptocurrencies. According to the IRS, cryptocurrencies have not only attracted use from money launderers and other criminals but are also being leveraged by tax cheats.

The IRS cryptocurrency initiative, which folds into its broader international crimes mandate, aims to identify individuals who are leveraging cryptocurrency accounts specifically to shelter taxable holdings from the U.S. government. The agency's Criminal Investigation (CI) Division has yet to charge anyone for offshore cryptocurrency holdings, but the team is focused on how users are converting cash to cryptocurrency and then back.

The IRS team has been examining the use of cryptocurrency accounts for the purpose of tax evasion since 2013, comparing the tax evasion risks associated with Bitcoin exchanges to the unregulated barter exchanges of the 1970s and 1980s. Last year, the IRS took cryptocurrency exchange Coinbase to court and prevailed in its efforts to gain access to records on the exchange's users. In February of this year, Coinbase advised its users that it will comply with the court order and hand over customer data on roughly 13,000 users in March.

Given the IRS's stated focus and increased enforcement related to cryptocurrencies - and despite there being little to no guidance on whether taxpayers should report offshore accounts that hold cryptocurrencies - as the April 17 FBAR deadline looms, taxpayers should consult a qualified tax professional regarding how to treat these holdings when reporting these offshore assets. In addition to individuals, the IRS is also examining unlicensed exchanges stateside and overseas.

By failing to report, an individual could be found guilty of willful nondisclosure - which carries both penalties and potential for prosecution - meaning taxpayers may have more to lose than to gain by leaving these account holdings out of their tax picture. While taxpayers and practitioners alike await official guidance from the IRS on how to report offshore cryptocurrency accounts, this increased focus and threat of prosecution from the IRS provides a clear signal that taxpayers should play it safe this year.