WASHINGTON, — In a widely anticipated move, the IRS (IR-2018-52) announced the termination of the Offshore Voluntary Disclosure Program (OVDP). With OVDP’s scheduled closure on September 28, 2018, the IRS will no longer have a formal program for resolving unreported income and informational return non-compliance with a set penalty structure. Iterations of the program have been in existence since 2009. “This was a remarkably long voluntary program to address tax non-compliance,” said Jim Mastracchio, a partner with Eversheds Sutherland (US) LLP. “The program not only provided protection from criminal tax investigation, it also afforded a path to compliance with both income tax reporting and informational return reporting with a set penalty structure.”
“Many circumstances can give rise to the requirement to file an informational return by a US person or green card holder and there is often misunderstanding regarding what forms need to be filed and what information should be included on them,” said Mastracchio. Failure to file informational returns can carry significant civil penalties and are often calculated based upon the dollar size of the transaction or omission.
The IRS has asked for comments from practitioners as to how best to deal with willful non-compliant situations after OVDP ends. Mastracchio commented, “Unless the IRS revises its present policy, after September 28, 2018, the path to full tax compliance would likely involve direct contact with the IRS Criminal Investigation Division through its local office. Taxpayers can certainly still come into compliance, but they should seek qualified legal counsel experienced with this particular disclosure process.”
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