WARNING: Update 3/13/2018. The IRS has announced the formal Offshore Voluntary Program discussed below will be closed on September 28, 2018. For more, see our post on the IRS’s press release: When is the Offshore Voluntary Disclosure Program Ending? IRS Announces September 28, 2018 as Last Day for Foreign Compliance Under OVDP.
Original post on October 19, 2015, below:
As reported in Accounting Today, a few days ago, the IRS reported that it had collected more than $8 billion from more than 54,000 taxpayers. Perhaps it should come as no surprise, then that the IRS continues to encourage taxpayers to utilize the Offshore Voluntary Disclosure procedures to become compliant in tax obligations.
As a tax attorney, I have seen an uptick in requests from taxpayers for assistance in becoming compliant in their offshore tax issues and foreign account disclosures. Most of the recent activity has been a result of FATCA and clients having received letters from their overseas banks. Many of them are also highly pleased to find that they may qualify for Streamlined Domestic Offshore Disclosure procedures. The IRS is happy, taxpayers are happy and, really, everyone should be pretty satisfied with the success of the various incarnations of the offshore disclosure initiatives.
Perhaps the best thing about the success of these initiatives is that it has provided a clear pathway for taxpayers to become compliant and has created a lot of press which has informed taxpayers of their obligations. My impression overall has been that most taxpayers want to be compliant but they either don’t know when they have made a mistake or, once they have made a mistake, didn’t know how to fix it without making things worse.
Of course, as a tax practitioner, it is my job to guide them. However, taxpayers now come in more informed and more educated. This is great because, when they can double-check my guidance through public resources, they are more likely to trust me and trust the IRS, both of which are necessary to a well-functioning system.
This, folks, is how the tax gap gets a little smaller.
Daniel Layton, the author of this post, is the principal of Tax Attorney OC.