IRS announces revisions to its offshore voluntary disclosure program
The IRS does not seem to be able to leave well enough alone for more than a year or two at a time. While the last change, in 2012, is only a couple of years old, the IRS announced new revisions that took effect on July 1, 2014. The difference with this change is the IRS may have actually improved the program for taxpayers, after having made the rules more difficult and the penalties harsher in the last three sets of revisions.
Key improvements in OVDP-2014 include:
- It applies to everyone – U.S. persons both in the United States and living outside of the United States
- The $1,500-per-year limit for underpaid taxes has been lifted
- Penalties have been reduced to 5 percent for residents and waived for nonresidents
- The risk questionnaire has been eliminated
In exchange for these benefits, taxpayers must:
- Submit a statement that certifies their noncompliance was not willful
- Pay the penalty with the OVDP submission
- Submit all supporting documents with the OVDP submission (though it can be done electronically)
In addition to these changes. the IRS has also, apparently, removed the ability to file information returns (like Forms 5471, 5472, 8865, and 926) late with no penalties. Taxpayers may now be subject to $10,000 (or more) in penalties for information returns filed late.
