In Part 2 of the 2014 IRSMedic Offshore Voluntary Disclosure Guide, tax attorney Anthony Parent discusses the OVDP process considerations and more specifically, the IRS OVDP FAQs #12-21.
Watch Part 2 of our Offshore Voluntary Disclosure Guide to learn answers to questions such as:
- Who is eligible to make a disclosure and what to do if you are not (hint: exercise your constitutional right to shut your mouth).
- What to do if you made a so-called soft-disclosure.
- Your real risk if you did attempt a soft-disclosure.
Do you even need to use the full Offshore Voluntary Disclosure Program? What are your alternatives?
The Standard OVDI under the 2012 rules is not for everybody. He also discusses who DOESN'T need to use the full OVDP. Like:
- Low-risk expats with unfiled taxes who qualified for the Streamlined OVDI.
- Those with just unfiled FBARS, Forms 5471, 5472, 3250s.
He also discusses things he learned along the way that somewhat contradict the OVDP FAQs like whether or not you can use the OVDP if you are under audit. The IRS FAQ says you can't, but actually you can under one narrow exception.
Questions Answered:
OVDP FAQ 12: Who is eligible to make a voluntary disclosure under this program?
OVDP FAQ 13: Are entities, such as corporations, partnerships and trusts eligible to make voluntary disclosures?
OVDP FAQ 14: I’m currently under examination. Can I come in under voluntary disclosure?
OVDP FAQ 15: What if the taxpayer has already filed amended returns reporting the additional unreported offshore income, without making a voluntary disclosure (i.e. quiet disclosure)?
OVDP FAQ 16: Some taxpayers have made quiet disclosures by filing amended returns. Will the IRS audit these taxpayers? If so, will they be eligible for the 27.5 percent offshore penalty? Is the IRS really going to prosecute someone who filed an amended return and correctly reported all their income?
OVDP FAQ 17: I have properly reported all my taxable income but I only recently learned that I should have been filing FBARs in prior years to report my personal foreign bank account or to report the fact that I have signature authority over bank accounts owned by my employer. May I come forward under this new program to correct this?
OVDP FAQ 18: Question 17 states that a taxpayer who only failed to file an FBAR should not use this process. What about a taxpayer who only has delinquent Form 5471s or Form 3520s but no tax due? Does that taxpayer fall outside this voluntary disclosure process?
OVDP FAQ 19: Is a taxpayer who previously sought relief under the IRS’s traditional Voluntary Disclosure Program before the OVDP was announced eligible for the terms of the OVDP?
OVDP FAQ 20: If I don’t have the ability to full pay can I still participate in this program?
OVDP FAQ 21: If the IRS has served a John Doe summons or made a treaty request seeking information that may identify a taxpayer as holding an undisclosed foreign account or undisclosed foreign entity, does that make the taxpayer ineligible to make a voluntary disclosure under this program?
