PILLA TALKS TAXES - Featured Article
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ONE MONTH LEFT FOR
OFFSHORE VOLUNTARY DISCLOSURE PROGRAM (OVDP)

No New Version to be Offered

by Daniel J Pilla 

In the March 2018 edition of PTT, I reported that the IRS will close down the Offshore Voluntary Disclosure program effective September 28, 2018. Since that time, there have been rumors circulating as to whether the IRS will change or otherwise redesign the program, and then re-introduce it. The answer appears to be no.  

Daniel Price, an attorney with the IRS’s Office of Chief Counsel in Austin confirmed that no new OVDP program is in the offing, including, no new “iteration of OVDP.” He claimed that rumors of a new version seemed to grow from an IRS request for comments on certain proposed tax forms. However, he claims that the forms have nothing do with the program, which will close at the end of next month. 

But that doesn’t mean taxpayers can’t continue to make voluntary disclosures. They can. The IRS has always had voluntary disclosure procedures generally, and they will not go away just because the specific voluntary disclosure program is closed. What will change, however, is the IRS’s willingness to “automatically” concede certain penalties, such as it did under the OVDP. I discuss voluntary disclosures generally in chapter 3, How to Get Tax Amnesty.

Nor does closing the program mean the IRS will shut down its offshore enforcement activities. It most certainly will not. Both the Foreign Accounts Tax Compliance Act and the Swiss Bank Program have bolstered the IRS’s data collection abilities and allowed them to track down thousands of U.S. citizens using offshore banks to hide assets and income. The agency will continue using these tools to identify and squeeze U.S. citizens with undisclosed foreign assets and income. 

In fact, Price stated that “Offshore issues remain a firm priority of the service.” He confirmed that the agency will continue to use the same investigative techniques that expose the scope and breadth of illegal offshore activity to begin with. Included in the agency’s toolbox is the so-called John Doe summons, which allows the agency to go on fishing expeditions through the records of businesses and organizations looking for taxpayers that meet a certain profile. This is exactly how the IRS is now going after those using virtual currency. See my article in the July 2018 issue of PTT, entitled, IRS Launches New Compliance Initiatives.

The OVDP netted IRS about $11 billion in back taxes, penalties, and interest from more than 56,000 participants since 2009.

This article is from the September 2018 Pilla Talks Taxes Newsletter.   It is one of the cutting edge articles you can read when you are a subscriber to Dan's electronic newsletter, Pilla Talks Taxes.    Newsletter subscribers can read and download the entire issue by logging in at http://taxhelponline.com/subscriber-login.html