The IRS on June 18 announced long-awaited changes, including some significant modifications, to the offshore voluntary disclosure program (OVDP).
The OVDP and its predecessor voluntary compliance initiatives have been ongoing since 2009, and have served as a way for taxpayers with undeclared foreign accounts to avoid criminal prosecution through disclosure and payment of penalties. The IRS says that in all, more than 45,000 taxpayers have come forward, paying taxes, interest and penalties of more than $6.5 billion.
The IRS's changes to the OVDP include an expansion of the streamlined procedures enacted in 2012. That program's eligibility has been expanded to include U.S. taxpayers residing in the United States. In addition, the updated program no longer requires the taxpayer to have $1,500 or less in unpaid tax per year and eliminates the required risk questionnaire.
The OVDP itself is modified to require additional information from taxpayers applying to the program and require taxpayers to submit account statements and pay the penalty up front. It also increases the penalty from 27.5% to 50% in certain situations, among other things.
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