2014 OVDP Rule Changes Have Been Announced




These are the highlights we see so far from the just-released 2014 OVDP FAQ

  • 50% offshore penalty for those whose bank is under investigation and submit a disclosure after June 30 2014.

  • Streamlined domestic program for those who can certify non-wilfulness can opt for a 5% penalty.

  • Streamlined rules for ex-pats liberated

  • Other 5% and 12.5% penalties superseded

  • Opt-out may still be the best option for those wanted to get finality and argue for no FBAR penalty.


The IRS has announced new rules changes; the 2014 Offshore Voluntary Disclosure Program.

We see two diverging reasons. First, many taxpayers will have their information reported to the IRS by their foreign banks because of FATCA, thus, any voluntary disclosure isn't all that voluntary, or even much of a disclosure. That is, the IRS will have the account information before the taxpayer has a chance to "come clean."


The other reason is that the IRS OVDI examiners have been overwhelmed with opt-out OVDPs from taxpayers who have "reasonable cause" for not filing an FBAR form. In the vast majority of OVDP clients we have, the taxpayers do have reasonable cause.


We know from experience that delays are measured in years, not months, to get an Opt-out Examiner assigned. The IRS simply is looking to cut a deal with those in the OVDP to accept a 5% penalty to close their case out instead of arguing for the 0% that they may be legally entitled to. Additionally, the IRS is unable to handle many of the so-called "soft" disclosures that have been filed and are giving taxpayers who have made such disclosures a way out.


Questions abound. What is the process for claiming a refund for those who have already come clean? Who should really NOT use the streamlined program. Who really should? If you need assistance, contact us. We can help.