How IRS Shutdown Affects Offshore Voluntary Disclosure Program

TaxConnections Picture - Dollar In OceanWhat Does the Shutdown Mean for the IRS Offshore Voluntary Disclosure Program (OVDP)?

Taxpayers wishing to enter the OVDP usually submit a request for a so-called “pre-clearance” regarding the taxpayer’s eligibility to join the program. This initial inquiry is made to the Internal Revenue Service Criminal Investigation Lead Development Center which responds by fax advising whether the taxpayer has been initially cleared to make a voluntary disclosure. Prior to the shutdown, there was a short delay due to high volume. With the shutdown, we have learned that pre-clearance inquiries are still being accepted at the following fax number — (+1 267-941-1115), but you can expect a processing delay.

Assuming a pre-clearance request is given the “green light”, taxpayers have 45 days from the receipt of the fax to submit a so-called Offshore Voluntary Disclosure Letter and its attachment which details all information regarding the unreported accounts. Once IRS receives that Letter, it will reply advising a taxpayer if he has been “preliminarily accepted” into OVDP. Preliminary acceptance into the OVDP is conditioned upon the information provided by the taxpayer being, and remaining, truthful, timely, and complete. The taxpayer must submit the FULL OVDP package along with payments of tax, penalties and interest to the IRS within 90 days of the preliminary acceptance letter.

No one knows how the shutdown will affect these time deadlines. The inevitable delays caused by the shutdown has clearly thrown significant uncertainty into the mix and many taxpayers are afraid that their foreign banks may close out their accounts before they have had a chance to be accepted into OVDP.

Please see FAQs 23, 24 and 25 discussing the procedural steps involved in the OVDP.

In accordance with Circular 230 Disclosure

Virginia La Torre Jeker J.D., has been a member of the New York Bar since 1984 and is also admitted to practice before the United States Tax Court. She has 30 years of experience specializing in US and international tax planning as well as international commercial transactions. She has been based in Dubai since 2001; prior to that time she worked in Hong Kong for 15 years as a US tax consultant for international law firms, major banks (including HSBC) international accounting firms (Deloitte) and trust companies. Early in her career she worked in New York with the top-tier international law firm, Willkie Farr & Gallagher.

Virginia is regularly asked to speak at numerous conferences and seminars for various institutes and commercial organizations; publishes a vast array of scholarly works in her area of expertise, been interviewed by CNN and is regularly quoted (or has her articles featured) in local and international publications. She was recently appointed to the Professional Tax Advisory Council, American Citizens Abroad, Geneva, Switzerland. She was a guest lecturer at the University of Hong Kong, LL.M Program (Law Department) and served as an adjunct Business Law professor at the American University of Dubai and at the American University of Sharjah where she also taught the legal / ethical aspects of internet law and internet based transactions.


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