IRS Launches Campaign to Address OVDP Withdrawals, Denials
Posted in Offshore Account Update on May 31, 2017 | Share
The Offshore Voluntary Disclosure Program (OVDP) started in 2009 and has allowed more than 55,800 taxpayers to come forward and voluntarily report that they failed to file their annual Report of Foreign Bank and Financial Account. Taxpayers have paid more than $9.9 billion in taxes, interest and penalties after coming forward and voluntarily admitting to the IRS that they didn't declare their offshore accounts at foreign banks. While this seems like a substantial amount of money, OVDP was actually created in order to help taxpayers limit the penalties they could face for undeclared offshore accounts.
Some taxpayers who tried to participate in OVDP were denied the ability to participate after submitting pre-clearance information. Others who tried to participate ended up withdrawing. Now, those who were declined and those who withdrew could become part of a new campaign launched by the IRS Large Business and International Division (LB&I). The campaign could potentially result in an examination, so it is best to talk with a Washington DC tax evasion attorney if you are concerned that you could be targeted due to declining or withdrawing from OVDP.
At Least 6,000 Taxpayers Could be Affected by LB&I Campaign
The lead executive who is overseeing the LB&I campaign into those who withdrew or declined from OVDP indicates that an estimated 6,000 taxpayers are currently affected. Because more people will likely apply for OVDP and will be denied eligibility in certain circumstances, the number of taxpayers who become caught up in the campaign is likely going to increase. The campaign is also one of just 13 that LB&I announced, so many taxpayers could end up facing examinations as part of other campaigns aimed at catching those who don't comply with tax laws.
For the taxpayers who are identified as being denied or withdrawing from OVDP, there are three possible treatment streams that could be available. The first is the best option, because it involves no additional actions on the part of taxing authorities. Those who have become compliant with laws on offshore banking could see no further action taken.
A second option involves taxpayers receiving a “soft letter,” explaining options for addressing the failure to report offshore accounts. These soft letters will generally require the taxpayer to respond. However, this is still better than the third option, which is an examination that will take place and that will take the form of a standard IRS examination.
When determining who will be selected for the campaign, ongoing compliance is a factor but residency is not a factor. The campaign is also mostly focused on individuals who failed to pay required taxes. Those who haven't provided information returns, but who don't owe money, are not likely to be a focus of the campaign.
Still, if you are concerned that you could become a target of an IRS examination, or if you have been notified already that you are facing an examination by the IRS, you should consult with attorney Kevin Thorn for help as soon as possible.