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OVDP Investigations are Underway

Offshore Account Update

Posted in on May 31, 2017

The Offshore Voluntary Disclosure Program (OVDP) was created to allow taxpayers to voluntarily come forward and admit they had not filed their required Reports of Foreign Bank and Financial Accounts. The purpose of OVDP was to reduce penalties for those who were not willful violators, because penalties in some cases have actually exceeded the value of undeclared offshore accounts.

Many applied for OVDPs, and some of those applicants were either not allowed to participate in OVDP or they ended up withdrawing instead of completing the program. Now, the IRS Large Business and International Division (LB&I) has announced that it will be addressing OVDP declines and withdrawals as part of 13 new compliance campaigns that LB&I is rolling out. According to the IRS, “The campaigns are the culmination of an extensive effort to redefine large business compliance work and build a supportive infrastructure inside LB&I.”

The campaign could mean that those who considered OVDP but who failed to make their voluntary disclosures could face examinations. Approximately six thousand taxpayers are affected by the OVDP Declines-Withdrawals Campaign, as the campaign is called. The lead executive of the campaign announced this number in early May. As more people apply for OVDP and some are not accepted to the program, the number impacted by the campaign could end up growing. 

Those who are thinking about OVDP should be sure to talk with an attorney before applying to fully understand the risks. Those who have already applied and who have been denied or who have withdrawn from the campaign should definitely get legal help as soon as possible from a Boston tax evasion attorney to understand what the campaign could mean to them and to prepare for the possibility of an IRS examination.

OVDP Declines and Withdrawals Campaign Impacts at Least 6,000 Taxpayers

Since OVPD began, more than 55,800 people have taken part in the program to voluntarily come forward and admit they had failed to file FBARs.  Those who participated have paid more than $9.9 billion in taxes, interest and penalties between the start of the program and October of 2016.  However, not everyone who initially applied to take part in the program was able to resolve their tax issues and successfully obtain reduced penalties. Some of the individuals who didn't successfully participate in OVDP could soon face serious tax problems.

According to reports on the new OVDP Declines-Withdrawals campaign, the campaign addresses both applicants who voluntarily withdrew from OVDP as well as those who applied for pre-clearance but who were not permitted to participate in the OVDP program.  Those who are in the OVDP will not be affected by the campaign, nor will those who were either removed from the program or who opted out.

The examination will go back to the beginning of the program, which started in 2009, to identify anyone who either withdrew or wasn't permitted to participate after seeking pre-clearance. When LB&I identifies a taxpayer who withdrew or who wasn't allowed to participate in OVDP, there are three possible courses of action.

The first option: if the taxpayer has become compliant, no further action will be taken.  The second option: the taxpayer will be sent a letter that must be responded to. The letter will outline the taxpayer's options for responding. The third option: examination. Those selected for an examination will be subject to normal exam procedures.

If you are subject to an examination, or concerned that you could be subject to an examination, you should contact a lawyer right away. Let Kevin Thorn help.


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