NEW OFFSHORE VOLUNTARY DISCLOSURE PROGRAM (OVDP) RULES GO INTO EFFECT

NEW OFFSHORE VOLUNTARY DISCLOSURE PROGRAM (OVDP) RULES GO INTO EFFECT We have been hearing rumors that the Treasury Department was going to be amending the OVDP program. Yesterday they did amend the program. Briefly, for people that have not yet filed for OVDP, the 27.5% penalty that is currently available will go up to 50% for filings on or after July 1 for offshore accounts at foreign financial institutions that have indicated that they will be complying. Thus anyone with accounts overseas should strongly consider acting quickly and in June. For people that have already filed, there are tweaks in the program that may make it beneficial to elect the new program. Thus, if you are currently in the program, it would behoove you to analyze whether such an election would prove beneficial to you. Here is the link to the new program: irs.gov/Individuals/International-Taxpayers/Offshore-Voluntary-Disclosure-Program-Frequently-Asked-Questions-and-Answers-2012-Revised

Commissioner of Internal Revenue Service talks of amending the Offshore Voluntary Disclosure Program (“OVDP”)

Commissioner of Internal Revenue Service talks of amending the Offshore Voluntary Disclosure Program (“OVDP”) IRS Commissioner John Koskinen has stated that the Internal Revenue Service "has also sought to encourage taxpayers to come into compliance voluntarily." Koskinen stated that the various OVDPs, ranging from the 2009 version and then the 2011 and now the current 2012 version have led to more than 43,000 voluntary disclosures from person paying over $6 billion in a combination of back taxes, interest, and penalties. Koskinen urged though that, while these three programs have been very successful, the IRS may amend the program "to accomplish even more." He said that the agency is "considering whether our voluntary programs have been too focused on those willfully evading their tax obligations and are not accommodating enough to others who don't necessarily need protection from criminal prosecution because their compliance failures have been of the non-willful variety." Those who have lived abroad for many years may be distinguished from U.S. resident taxpayers who were willfully hiding their investments overseas and stated that "[w]e expect we will have much more to say on these program enhancements in the very near future." The National Taxpayer Advocate has previously criticized the three OVDPs as prescribing a "one-size-fits-all" approach. The NTA states that the stiff penalty may be unfair since it fails to draw any distinction between those who willfully vs. inadvertently fail to report foreign accounts. Stay tuned for further developments when they occur.