ATTORNEY
THE MOSELEY LAW FIRM
UNITED STATES
New IRS Offshore Account Policy, Bigger Penalties For Secret Accounts

It has been ten years since the IRS started winning big in foreign bank account cases. Some people have gone to prison, but the vast bulk of offshore accounts have been disclosed under the IRS programs designed for taxpayers to come forward. In fact, the IRS has collected over $10 billion in taxes and penalties, and more keeps coming in. The biggest and longest running of the amnesty programs, the Offshore Voluntary Disclosure Program, or OVDP, closed on September 28, 2018, unless you filed your initial papers before that deadline. If you did not file by then, you could still enter the Streamlined program, but you have to consider streamlined audits. Now, the other offshore shoe has fallen in this IRS memorandum. The new rules are effective for all disclosures after September 28, 2018. And the possible penalties have gone up quite significantly. Here are the major differences between the old OVDP and the new practice.
The IRS says taxpayers will be required to request preclearance (which used to be optional). The criteria for preclearance are unaffected. Therefore, a taxpayer denied preclearance under the old OVDP would probably also be denied preclearance under the new disclosure program.
As with the old OVDP, preclearance and an initial submission are to be made to the IRS Criminal Investigation office in Philadelphia. The initial submission will continue to involve the filing of a Form 14457. However, the Form 14457 will be revised, and will require applicants to provide a narrative statement about their circumstances. The narrative statement will require taxpayers to disclose the facts and circumstances of their assets, entities, related parties, and any professional advisors involved in the tax noncompliance in order for the taxpayer to be preliminarily accepted into the new program.
Unlike the old OVDP, taxpayers will not submit documents to the Austin, Texas IRS office after being preliminarily accepted into the program. The Austin office will no longer be collecting and assembling the large submission of documents required under FAQ #25 of the old OVDP. Instead, the Austin office will route disclosures to a field agent. The disclosure process, document submission, and payment will occur directly with an IRS field agent. Nevertheless, if taxpayers want to stop interest accruing on their underpayments, they can choose to submit payments to the Austin office before a field agent is assigned.
The IRS field agent is supposed to follow standard examination procedures for assembling and reviewing disclosures, rather than the more informal compliance check model that field agents used to review OVDP submissions.
warren g. moseley
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