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Archive for Offshore Voluntary Disclosure Program

Offshore Voluntary Disclosure Program (OVDP) Update

Manasa Nadig - OVPD

It has been exactly a year to the day Part I of this post went up. The Internal Revenue Service decided to put an end to the Offshore Voluntary Disclosure Program (OVDP) on September 28th, 2018. That was just a precursor of the tumultuous changes to come at the Internal Revenue Service.

In November of 2018, the IRS released a Memorandum with updated procedures regarding voluntary disclosure both domestic and foreign submitted to them after September 28th, 2019. Notwithstanding the closure date, the IRS has the discretion to apply the new procedures to domestic voluntary disclosures received on or before September 28th, 2018.

Procedures Under The New OVDP

1.   All taxpayers, whether offshore or domestic need to submit a preclearance request on Form 14457 for screening to Criminal Investigation {CI} to determine eligibility. This can be requested via Fax or Mail to the IRS Criminal Investigation unit in Philadelphia.

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The Offshore Voluntary Disclosure Programs Still Lack Focus #3 Transparency, Violating the Right to Be Informed

Offshore Voluntary Disclosure Program

TAXPAYER RIGHTS IMPACTED

■ The Right to Be Informed

■ The Right to Quality Service

■ The Right to Challenge the IRS’s Position and Be Heard

■ The Right to Privacy

■ The Right to a Fair and Just Tax System

DISCUSSION

Beginning in 2009, the IRS established a series of Offshore Voluntary Disclosure Programs (OVDPs), which allow certain people who have not reported all of their foreign assets and income to settle with the IRS by paying taxes, interest, penalties, plus a “miscellaneous offshore penalty” (MOP). It also established a “streamlined” program for those who could certify their violations were not willful. These programs are governed by frequently asked questions (FAQs) posted on the IRS website. 2 The Large Business and International (LB&I) Division Withholding and International Individual Compliance (WIIC) Director can approve minor changes to the FAQs, but the Commissioner or Deputy Commissioner must approve significant ones. 3 IRS examiners interpret the FAQs with assistance from technical advisors and Small Business/Self-Employed (SB/SE) Counsel.  They may also access training materials and job aids posted to a secure SharePoint intranet site.

The IRS Does Not Disclose Interpretations of OVDP Frequently Asked Questions (FAQs)

Chief Counsel Advice from (or coordinated with) national office attorneys must be disclosed under IRC § 6110. 6 Other “instructions to staff” that affect the public must be disclosed under the Freedom of Information Act (FOIA). 7 However, the IRS does not disclose its interpretations of FAQs. For example, when the IRS first established the 2009 OVDP, it did not disclose how it interpreted FAQ #35, which addressed how to compute the “offshore penalty.” The guidance memo was only disclosed in response to a Taxpayer Advocate Directive. 8 Practitioners have highlighted other undisclosed and counterintuitive FAQ interpretations.9

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IRS: Offshore Voluntary Compliance Program To End September 28, 2018

IRS - Offshore Voluntary Disclosure Program Ends September 28, 2018

The Internal Revenue Service today reminded taxpayers they have until Sept. 28 to apply for the Offshore Voluntary Disclosure Program (OVDP).

Since the OVDP’s initial launch in 2009, more than 56,000 taxpayers have used the various terms of the program to comply voluntarily with U.S. tax laws. These taxpayers with undisclosed offshore accounts have paid a total of $11.1 billion in back taxes, interest and penalties. The planned end of the current OVDP also reflects advances in third-party reporting and increased awareness of U.S. taxpayers of their offshore tax and reporting obligations.

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