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Additional Guidance for Taxpayers Considering the IRS OVDP

Posted on August 9th, 2012 | Author: Norris McLaughlin & Marcus

In our last post regarding Offshore Voluntary Disclosure Program (“OVDP”), we wrote about the Internal Revenue Service’s new efforts to help U.S. Citizens living abroad, including dual citizens and those with foreign retirement plans, understand their U.S. reporting requirements.  We also noted that notwithstanding that notice, the Service had not released any formal guidance in the area.  Since that post, the Service has issued guidance for the new OVDP in the form of a question and answer publication (“2012 Q and A”) similar to the one issued for the 2011 Offshore Voluntary Disclosure Initiative. The main differences in the 2012 Q and A from 2011 are as follows:

  1. There is no expiration date on the new program, though the IRS has written in several publications that this could change at any time;
  2. There is a new attachment to the taxpayer criminal investigation letter which requires additional information on the offshore accounts;
  3. The asset based penalty is now 27.5% of the highest aggregate balance in the program years, whereas it was 25% in 2011;
  4. There are changes to the submission addresses; and
  5. The voluntary disclosure period continues to be the eight years prior to the most recent year, generally.

For full access to the 2012 Q and A, you may click here.

Recall also from our previous post that the IRS has a new program which goes into effect on September 1, 2012, with new filing procedures for U.S. taxpayers living abroad.  Taxpayers meeting these criteria should not participate in 2012 OVDP, but should use the September 1 filing procedures.