Knowing the penalty structure for the newly modified IRS programs can make choosing your best option even easier.
Jeffrey S. Freeman, J.D., LL.M
Changes to the Offshore Voluntary Disclosure Program (OVDP) and Streamlined Compliance Procedures may have you second guessing your decision to participate in the OVDP. You have the option to stay in the OVDP, but you may also be able to take advantage of benefits from both programs.
A change to the program, the streamlined compliance procedure is now available to both U.S. and offshore non-U.S. residents that can certify their tax noncompliance was non-willful. The new streamlined procedure offers a lesser penalty (5% on foreign assets that caused the non-compliance issue) than the 27.5-50% in the OVDP, but does not offer the same audit and criminal liability protections since all omissions were non-willful .
Those currently “in” the OVDP or taxpayers that submitted an offshore voluntary disclosure intake letter by June 30, 2014 can request a favorable penalty structure under the streamlined compliance procedures and still maintain the audit and criminal liability protection offered by the OVDP. This may be a favorable financial decision and will likely entice many U.S. residents that were not eligible under the prior streamlined procedure.
If you are looking to jump over to the streamlined compliance procedures the IRS is encouraging taxpayers to be careful when determining if their conduct was actually non-willful. The IRS is receiving large amounts of information through the newly implemented FATCA program that can be used to cross-check and compare claims. Certifying that you were non-willful when in fact you are willful is a crime it is not encouraged to seek a lesser financial penalty under the streamlined offshore compliance procedures in this situation.
The IRS is trying to provide more flexibility to those that want to get their taxes in order and a qualified tax professional can help you understand the best option for your financial situation.
About Freeman Tax Law
Freeman Tax Law is equipped to handle all domestic and international tax law matters. At Freeman Tax Law, the attorneys and professional staff have vast experience with foreign tax compliance, international tax planning, and resolving tax controversies involving offshore banking matters. Freeman Tax Law helps taxpayers and foreign entities become in compliance with laws such as Foreign Account Tax Compliance Act (FATCA) and Offshore Voluntary Disclosure Program (OVDP). In addition to handling complex tax controversies, the Freeman Tax Law team has extensive expertise in assisting clients with wealth management and estate planning.
Freeman Tax Law