Thursday, July 10, 2014

IRS OVDP vs. New Streamlined?

IRS OVDP vs. Streamlined: What To Do? - Forbes -The IRS recently announced Streamlined Filing Compliance Procedures in an effort to encourage U.S. taxpayers to come into compliance with their reporting and filing requirements associated with varying interests in foreign financial accounts and assets. The streamlined procedures require the filing of original (for non-residents) or amended (for residents) tax returns. Such tax returns must not only report whatever foreign source income was generated in each of the applicable tax years but must also properly report any U.S. source income and deductions for each of the applicable tax years. 

For eligible U.S. taxpayers residing outside the United States, all penalties will be waived under the streamlined procedures. For eligible U.S. taxpayers residing in the United States, the only penalty under the streamlined procedures will be a miscellaneous offshore penalty equal to 5 percent of the foreign financial assets that gave rise to the tax compliance issue (all income tax related penalties associated with the non-U.S. source income will be waived).

Feel Lucky? The streamlined procedures do not limit the civil penalties otherwise associated with the reporting of U.S. source income. IRS Offshore Voluntary Disclosure Program (OVDP) Frequently Asked Question 7.1 provides “The offshore penalty structure only resolves liabilities and penalties related to offshore noncompliance. Domestic portions of a voluntary disclosure are subject to examination.”

Further, the streamlined procedures do not provide protection from a possible criminal prosecution referral. However, the IRS Voluntary Disclosure Practice set forth in IRS Internal Revenue Manual (IRM) would seem to provide a pass from a criminal referral if the appropriate “bells and whistles” set forth in IRM are followed (a “truthful, timely, complete” disclosure, “ willingness to cooperate”, “taxpayer makes good faith arrangements with the IRS to pay in full, the tax, interest, and any penalties determined by the IRS to be applicable,” etc. ).

Want to Know How The New OVDP Program

 Can Benefit You?

Contact the Tax Lawyers at
Marini & Associates, P.A.

for a FREE Tax Consultation Contact US at 
or Toll Free at 888-8TaxAid ((888) 882-9243)

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