International tax reporting requirement are constantly evolving, and it's our job to stay on top of changes that affect our clients. We had been told there were changes made to the Offshore Voluntary Disclosure Program's (OVDP) FAQs. We had also seen agitating headlines like Beware of FAQ changes! and OVDP FAQs: Be careful! As the national leading offshore disclosure firm, we couldn't help but wonder what big story we were missing.
After digging a little we found the September 2016 OVDP FAQ changes. They were so minuscule it took us all of 2 minutes to make the appropriate updates to our software. It was simply a couple of phone number changes. Well that, and the IRS deleted a duplicated paragraph.
What are the OVDP FAQs?
When it comes to OVDP/Streamlined/Delinquent Info Reporting, the guidance from the IRS on these important programs falls in the lowest, least authoritative, and non-binding tier.
Think of it this way – the Internal Revenue Code is legally binding statute. Pretty cut and dry; here's the law, and here's how to follow it. But for OVDP reporting, most of the requirements are simply html on a webpage. Instead of being law, the IRS will reference other standards. Some examples:
- Treasury (tax) Regulations: These are legally binding interpretation of statute.
- The Internal Revenue Bulletin: Taxpayers can rely on it as authoritative as precedent because the IRS is bound by it (but again…not officially a law!)
- Written Determination: These are binding on the IRS as to the specific taxpayer and facts, and can only be relied on as authoritative and as precedent by addressee taxpayer. (Huh?)
As if international reporting isn't confusing enough; it's also open to 'loose interpretations' found on a website. It's as if the IRS is saying, "here's all this content. . . but don't cite it." The OVDP FAQs are important because it's the closest thing to actual requirements that the IRS has published!
What's been changed?
After reviewing the FAQs, we found the following changes made to OVDP FAQ #23, "How do I request pre-clearance before I submit my offshore voluntary disclosure?"
Change 1: "The LDC fax number to request pre-clearance before making an offshore voluntary disclosure is 267-466-1115." (the old number was 267-941-1115)
Change 2: Last sentence of the question – "For all other offshore voluntary disclosure questions call the IRS OVDP Hotline at 267-466-0020." (the old number was 267-941-0020)
They also removed a paragraph that was accidentally duplicated. That's it.
It's our opinion that taxpayers don't need to be scared into taking action by conflating a clerical change with something substantive (the truth is complicated enough). We try to educate everyone so they can make the optimal decision with a clear head. If you need assistance with an offshore issue, contact us to set up a complimentary, confidential consultation. Call us at 888-727-8796 or email info@irsmedic.com.
