IRS Announces New International Voluntary Disclosure Program for Foreign Bank Accounts
The IRS announced a new international voluntary disclosure program for taxpayers with undisclosed foreign bank accounts and other international filings. The memorandum can be found at the link below:
The Offshore voluntary Disclosure Program (OVDP) allowed taxpayers with delinquent international filings, such as delinquent FBAR forms, or delinquent IRS Form 5471 to become compliant. More than 56,000 taxpayers have come forward since the original offshore voluntary disclosure program was announced, with more than $11 Billion in back taxes, interest and penalties collected. The IRS discontinued the OVDP as of September of 2018.
New Voluntary Disclosure Program
A new voluntary disclosure program was announced. The new program brings some changes from the OVDP. Amongst the changes is a larger fine under the new program. The fine under the new program is 75% (versus 27.5% under the OVDP). In addition, the new disclosure program is available for both taxpayers needing to disclose foreign bank accounts, and taxpayers that have not been fully compliant with domestic accounts. Under the voluntary disclosure program, a 6 year disclosure period is required, with examination of the 6 most recent tax years. However, if the voluntary disclosure is not resolved by agreement, the IRS may expand the scope to include additional tax years.
Streamline Filing Procedure Still Available
In the memorandum describing the new voluntary disclosure program, the IRS does make clear that the Streamline Offshore Filing Procedure and the delinquent FBAR submission procedure, and the delinquent international information return submission procedures will continue, and remain available for taxpayers that are non-willful. The IRS does note, however, that the Streamline offshore filings procedure may be discontinued at any time as well.
With the new offshore voluntary disclosure program, as with prior programs, it is critical that taxpayers consult an international tax attorney that can best assist them to determine the best filing procedure for them. As with past cases, there is no one size fits all approach.
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