October 17, 2019 Articles

Updated Process for Offshore Voluntary Disclosures

The updated process for the OVDP may seem, on its face, to mirror the former program. Read on to determine whether and how the updates may impact you and your clients.

By Eli S. Noff and Mary Lundstedt

The objective of the former Offshore Voluntary Disclosure Program (OVDP) enabled willful U.S. taxpayers with undisclosed foreign assets to become compliant with U.S. tax laws, while concurrently avoiding serious statutory civil penalties and practically removing any risk of criminal prosecution. On November 29, 2018, the Internal Revenue Service (IRS) posted Internal Revenue Manual (IRM) §9.5 Interim Guidance in a memorandum (the Memo) addressing the process for all domestic and offshore voluntary disclosures since the closing of the OVDP on September 28, 2018. (LB&I-09-1118-014 (Nov. 20, 2018). We discussed the end of the OVDP in an earlier article, “End of Offshore Voluntary Disclosure Program Imminent.”) Generally, the voluntary disclosure process maintains similarity to the OVDP, but taxpayers and practitioners should note the revisions highlighted here, including the higher penalty for unreported taxes due.

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