IRS Announces Changes to the Offshore Voluntary Disclosure ProgramJuly 2014
As you may have read, the Internal Revenue Service (“IRS”) recently announced changes to its offshore voluntary disclosure programs and announced new options for taxpayers to come into compliance with their U.S. tax obligations.
This alert summarizes some of the significant modifications made to the program and summarizes the new, expanded Streamlined Filing Compliance Procedures Program, which is now available for taxpayers who previously filed U.S. tax returns and for taxpayers who reside in the U.S. (as long as the other eligibility requirements are satisfied).
I. Changes to the Offshore Voluntary Disclosure Program (the “offshore program” or “OVDP”)
In many respects, the offshore program remains the same – generally, taxpayers who participate in the program must submit, with respect to the prior eight years, amended or delinquent tax returns, applicable information returns and the Report of Foreign Bank and Financial Accounts (the “FBAR”) and submit payment of tax, interest, applicable tax return penalties and the offshore penalty (which is now either 27.5 or 50%, as noted below). As in the 2012 OVDP, the offshore penalty is based on highest aggregate value of the taxpayer’s undisclosed foreign accounts and assets.
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