Answers to the Most Frequently Asked Questions Regarding OVDP

As a tax attorney specializing in the Offshore Voluntary Disclosure Program (OVDP), nary a day goes by that I don’t get a call from a person inquiring about the OVDP. The questions asked are relatively the same. After a while, I began to make a list of the most frequently asked questions. Below are my answers to them: (continued)

XIV. If the amount of income that I underreported from my foreign bank account was de minimis, do I really need to enter the program?

According to the IRS, no amount of unreported income is considered de minimis for purposes of determining whether there has been tax non-compliance with respect to an account or asset.

XV. If the IRS has served a John Doe summons or made a treaty request seeking information that identifies me as the holder of an undisclosed foreign account or undisclosed foreign entity, does that disqualify me from making a voluntary disclosure under this program?

No. The mere fact that the IRS has served a John Doe summons, made a treaty request or has taken similar action does not automatically disqualify every member of the John Doe class or group identified in the treaty request from participating.

However, that comes with the following caveat. Once the IRS or DOJ obtains information under a John Doe Summons, treaty request or other similar action that provides evidence of a specific taxpayer’s noncompliance with the tax laws, that particular taxpayer will become ineligible for OVDP.

Another way in which taxpayers will become ineligible is if the IRS announces that certain taxpayer groups with bank accounts at specific foreign financial institutions will be ineligible. Normally, this arises out of U.S. government action in connection with specific foreign financial institutions.

Next: XVI. If I enter OVDP, will my voluntary disclosure be subject to an examination?

In accordance with Circular 230 Disclosure