By: Steven J. Mopsick and Allison Ornelaz
As many in the tax and accounting field have
predicted for some time, the IRS will be ending the 2014 Offshore Voluntary
Disclosure Program (OVDP) officially on September 28, 2018. See
IR 2018-52.
The OVDP has been around since 2009, partly in
response to the implementation of the Foreign Account Tax Compliance Act
(FATCA), as well as stepped up IRS enforcement generally, in the foreign area.
Over the past nine years, the program has produced a total of $11.1 billion
from over 56,000 taxpayers. The program at its peak saw 18,000 taxpayers come
forward in 2011 and has been on a decline ever since. A mere 600 taxpayers came
forward through the program in 2017.
What is the IRS’ rationale for ending the program? One could assume the IRS believes that
taxpayers have had plenty of time to heed the requirement to disclose their
unreported offshore financial assets and come into compliance. Arguably, the
rationale for ending the program is, those who have either had their head in
the sand or are willfully avoiding their tax reporting obligations should not
be granted any type of “deal” the IRS may grant for voluntarily coming forward.
Fortunately taxpayers who fit the criteria for the
Streamlined Filing Compliance Procedures will still be able to use those
protocols. However, the IRS reminds us that just as it has done with OVDP, the
Streamlined Procedures can end at any time, urging taxpayers with undisclosed
foreign financial assets to come forward now before risking draconian penalties
and even potential criminal action.
Along with the Streamlined Filing Compliance
Procedures remaining as an available option, the IRS also mentions the Criminal
Investigation Voluntary Disclosure Program, Delinquent FBAR submission procedures,
and the delinquent international information return submission procedures which
will also remain in effect.
