Last Call: The Offshore Voluntary Disclosure Program to End

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Jason B. Freeman

Jason B. Freeman

Managing Member

214.984.3410
jason@freemanlaw.com

Mr. Freeman is the founding member of Freeman Law, PLLC. He is a dual-credentialed attorney-CPA, author, law professor, and trial attorney.

Mr. Freeman has been named by Chambers & Partners as among the leading tax and litigation attorneys in the United States and to U.S. News and World Report’s Best Lawyers in America list. He is a former recipient of the American Bar Association’s “On the Rise – Top 40 Young Lawyers” in America award. Mr. Freeman was named the “Leading Tax Controversy Litigation Attorney of the Year” for the State of Texas for 2019 and 2020 by AI.

Mr. Freeman has been recognized multiple times by D Magazine , a D Magazine Partner service, as one of the Best Lawyers in Dallas, and as a Super Lawyer by Super Lawyers, a Thomson Reuters service. He has previously been recognized by Super Lawyers as a Top 100 Up-And-Coming Attorney in Texas.

Mr. Freeman currently serves as the chairman of the Texas Society of CPAs (TXCPA). He is a former chairman of the Dallas Society of CPAs (TXCPA-Dallas). Mr. Freeman also served multiple terms as the President of the North Texas chapter of the American Academy of Attorney-CPAs. He has been previously recognized as the Young CPA of the Year in the State of Texas (an award given to only one CPA in the state of Texas under 40).

With the IRS recently announcing that it intends to officially close the Offshore Voluntary Disclosure Program (“OVDP”) by September 28, 2018, it has formally issued a “last call” for taxpayers with willful foreign reporting deficiencies.  According to the IRS, the announcement of the coming end to the OVDP “reflects advances in third-party reporting and increased awareness of U.S. taxpayers of their offshore tax and reporting obligations.”  In other words, the IRS believes that taxpayers should now be aware of their reporting obligations and that it has sufficient access to foreign records/information to eventually identify many taxpayers.

Some readers may recall my prediction—in a post almost one year ago to the day—that OVDP program statistics indicated, to me at least, that the OVDP’s “days were limited” and that it likely would not be around significantly longer.  See An Update on International Tax Enforcement. That prediction has come to fruition with the IRS’s recent announcement.

The OVDP has been perhaps the most successful program in IRS history.  In a nutshell, it offers criminal amnesty (the government agrees not to prosecute) in exchange for a qualifying taxpayer coming forward and disclosing their previously unreported foreign assets or income.  Since its initial launch in 2009, more than 56,000 taxpayers have come into compliance through the program (not including the 65,000-plus taxpayers who have come into compliance through the related Streamlined Filing Compliance Procedure). All told, OVDP disclosures have resulted in payments of $11.1 billion in back taxes, interest and penalties related to previously undisclosed foreign accounts.

The IRS has warned that those who have not come forward continue to face substantial risks and exposure.  In recent years, the IRS Criminal Investigation Division has initiated indictments of more than 1,500 taxpayers on criminal violations related to international activities.  Thousands more have come under civil examination.  Billions of dollars in tax and penalty assessments have resulted from these enforcement activities.

In its announcement, the IRS specifically warned that “By alerting taxpayers now, [it] intends that any U.S. taxpayers with undisclosed foreign financial assets have time to use the OVDP before the program closes.”  The IRS’s official statement indicated that:

“Taxpayers have had several years to come into compliance with U.S. tax laws under this program . . .” “All along, we have been clear that we would close the program at the appropriate time, and we have reached that point. Those who still wish to come forward have time to do so.”

While it is closing the OVDP, the IRS is not currently closing its Streamlined Filing Compliance Procedure program for taxpayers with non-willful violations.  However, it continues to indicate that the Streamlined program may end at any time as well.  Its closure is likely now only a matter of time—whether that will be months or years, though, remains to be seen.

With the close of the OVDP looming, taxpayers with undisclosed foreign assets may have a short window of opportunity left to come into compliance under current IRS programs.  As a result, taxpayers with foreign reporting issues should—now more than ever—consult with tax counsel to determine their options.

For prior related posts, see: IRS Offshore Compliance: New Stats Indicate a Slow in OVDP Submissions,

TIGTA Report Critical of the Offshore Voluntary Disclosure Program, Finds that the IRS Should Assess More FBAR PenaltiesGovernment Report Finds that Improvements are Needed in the Offshore Voluntary Disclosure Program,

Offshore Tax Evasion Remains on IRS “Dirty Dozen” List for 2017,

How the FBAR’s “Willfulness” Element Has Recently Evolved,

Litigating FBAR Penalties: The Burden of Proof and the Meaning of Willfulness

An Update on International Tax Enforcement

 

International & Offshore Tax Compliance Attorneys

Need assistance in managing the Tax Compliance process? Freeman Law can help businesses and individuals manage critical tax risks and make sense of complex international tax compliance rules. We offer value-driven legal services and provide practical solutions to complex tax issues.  Schedule a consultation or call (214) 984-3410 to discuss your tax concerns.

 

https://freemanlaw.com/practice-areas/international-offshore-tax-compliance/