In efforts to increase offshore tax compliance, the IRS just made brand new changes to its current offshore disclosure programs.
The expanded streamlined procedures are available to a wider population of U.S. taxpayers living outside the country and, for the first time, to certain U.S. taxpayers residing in the United States. The changes include:
• Eliminating the existing reduced penalty percentage for certain non-willful taxpayers in light of the expansion of the streamlined procedures;
• Requiring taxpayers to submit all account statements and pay the offshore penalty at the time of the OVDP application;
• Enabling taxpayers to submit voluminous records electronically rather than on paper;
I will add more in a later post. You can find the news release here. Please contact the Wilson Tax Law Group if you have questions about offshore bank account disclosures or FBAR matters under the July 1, 2014 or transitional procedures. We have handled numerous offshore cases.
Update: The IRS has published FAQ's for the Transition Rules drawing a clear line as to who can qualify for the pre-July 1, 2014 penalty rates.
Q: What if I made a request for OVDP pre-clearance before July 1, 2014, but not a full voluntary disclosure?
A: A taxpayer will not be considered to be currently participating in OVDP for purposes of receiving transitional treatment unless, as of July 1, 2014, he has mailed to IRS Criminal Investigation his voluntary disclosure letter and attachments as described in OVDP FAQ 24. Thus, a taxpayer who makes an offshore voluntary disclosure as outlined in FAQ 24 on or after July 1, 2014 will not be eligible for transitional treatment under OVDP, even though he may have made a request for OVDP pre-clearance before July 1, 2014.
These transitional FAQs can be found here.
The FAQ for the effective-July 1, 2014 OVDP can be found here.