March 2018 JD Supra
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Taxpayers with undisclosed foreign accounts need to COME FORWARD NOW. Offshore Voluntary Disclosure Program Ends September, 2018 – JD Supra 4/3/18.

On March 13, 2018, IRS announced the termination of the Offshore Voluntary Disclosure Program (OVDP) as of September 28, 2018 (Notice IR-2018-52).  OVDP has been available to Taxpayers that willfully failed to report foreign financial assets and pay all tax due in respect of those assets.  The program (available since 2009) was designed to protect Taxpayers from criminal liability and provide terms and resolution for the Taxpayer’s tax and penalty obligations. 

Taxpayers have until September 28, 2018 to submit a fully completed OVDP, which includes the Offshore Voluntary Disclosure Letter (Form 14457). IRS-Criminal Investigation reviews Form 14457 and notifies the Taxpayer or their Representative if the OVDP disclosures have been preliminarily accepted as timely or declined. Once a taxpayer’s disclosure has been preliminarily accepted by IRS-Criminal Investigation as timely, the Taxpayer must complete the submission and cooperate with the civil examiner in the resolution of the civil liability before the disclosure is considered complete.

IRS wants to ensure that Taxpayers understand that closing the OVDP initiative is NOT an indicator that the IRS is changing its priority towards offshore tax compliance.  This is further evidenced by the establishment of the International Tax Enforcement Group.  This Group will be dedicated to working with subject experts that have worked cases of international tax compliance in tandem with enhanced data analytics sourced from:  The Bank Secrecy Act (BSA),  FATCA Intergovernmental Agreements (IGAs), Foreign Bank Account Reports (FBARs), Department of Justice Swiss Bank Program, John Doe Summons, Automatic Third Party reporting, Whistleblowers, The Panama Papers and FATCA.

What is available after September 28,2018?

  • The Streamlined Filing Compliance Procedures are available Taxpayers that can certify under penalties of perjury that their conduct was non-willful.
  • The Delinquent FBAR Procedures and the Delinquent International Information Return Procedures will remain available for eligible Taxpayers that have information reporting failures but NO tax noncompliance.
  • The IRS-Criminal Investigation Voluntary Disclosure Program. It appears that IRS will continue with the Taxpayer’s Voluntary Disclosure Practice. 

Urgency to Come Forward NOW

If the Taxpayer does not meet the Criteria of the Streamlined Filing Compliance Procedures, the Delinquent FBAR Procedures or the Delinquent International Information Return Procedures, it is not clear how a Taxpayer with significant offshore noncompliance will be able to remedy his/her situation after September 28, 2018.  Notice IR-2018-52 has Frequently Asked Questions that state that additional information on how to make disclosures will follow after September 28, 2018.

Don’t be a victim of your own making.  If you are a Taxpayer with unreported foreign financial assets and have failed to file foreign information returns, consult your specialized tax Representative NOW.