Wealthy clients with overseas accounts need to know that a key tax program is ending: The IRS Offshore Voluntary Disclosure Program (OVDP) closes on Sept. 28.

This program enabled taxpayers to voluntarily reveal unreported foreign financial assets without the threat of facing criminal or civil charges. Since the OVDP’s launch eight years ago, more than 56,000 taxpayers voluntarily paid $11.1 billion in back taxes, interest and penalties.

Though most banking and business conducted abroad from the U.S. is legitimate–and some countries make excellent overseas spots for assets–the "Panama Papers" recently highlighted the potential risk of offshore assets. Millions of documents from a Panama law firm revealed the identities of true owners of some 214,000 shell companies and billions in untaxed international assets.

“It’s extremely risky and unwise to try to get away with hiding assets. There’s much more international cooperation now,” said Robert Seltzer, a CPA with Seltzer Business Management in Los Angeles. “It’d be my recommendation that any taxpayer who still hasn’t reported these assets take advantage of this program quickly.”

“Congress and the IRS have been focused on eliminating the ability of U.S. persons to hide assets in foreign countries without reporting the related income,” said Edward Jenkins, a CPA and senior tax consultant with Boyer & Ritter in State College, Pa. “Hiding ... assets also makes those assets unavailable to U.S. creditors–especially the IRS.”

One regulatory regime to limit the ability to shield foreign earned income and assets is the Bank Secrecy Act. “The purpose of the BSA is to catch criminals involved in money laundering, drug trafficking, terrorism and the financial flows associated with other criminal activity,” Jenkins said. “A corollary of that purpose is to catch those who seek to hide assets from U.S. creditors and shield income from taxation in the U.S.”

The primary tool for enforcement is a system of financial reporting to the Financial Crimes Enforcement Network (FinCEN) of the Treasury Department. U.S. persons must also annually file a Foreign Bank Account Report (FBAR) that identifies foreign bank and securities accounts in which the filer has a financial interest or signature authority.

FinCEN also receives reports of suspicious activities from financial institutions when large quantities of funds move from bank to bank, Jenkins said.

The key concern for wealthy holders of overseas accounts: the Foreign Asset Tax Compliance Act (FATCA), passed as part of the Hiring Incentives to Restore Employment Act in 2010 and which requires foreign financial institutions and some other foreign entities to report the foreign assets held by U.S. citizens. FATCA authorized the IRS to negotiate intergovernmental information exchange agreements with foreign nations.

“The IRS has executed those agreements with a majority of trading partners,” Jenkins said.

Failure-to-file penalties fall into two categories. “The non-willful penalty can be up to $12,459 for each negligent violation with no criminal provision for the non-willful taxpayer,” Jenkins said. “Taxpayers in the willful camp–who knew about the requirement yet still failed to file–can be liable for a civil penalty up to the greater of $124,588 or 50 percent of the account balance at the time of the violation, for each violation. Absent fraud, the statute of limitation is open for six years for a foreign failure to file. The criminal penalty ... can be up to $250,000 and five years in prison.”

Check with your wealthy client’s tax preparer to see if overseas-account filing has been addressed. “Practitioners should have questions in their tax organizer that address this issue, and they should follow up with any clients that they’re suspicious of not being in compliance,” Seltzer said.