IRS targets former users of US offshore disclosure programme
The United States Internal Revenue Service Large Business and International Division are launching six additional compliance campaigns, with one of them focusing on taxpayers who have formerly used the Offshore Voluntary Disclosure Program (OVDP).
"US persons are subject to tax on worldwide income. This campaign addresses tax noncompliance related to former Offshore Voluntary Disclosure Program (OVDP) taxpayers' failure to remain compliant with their foreign income and asset reporting requirements. The IRS will address tax noncompliance through soft letters and examinations," the IRS said in a statement explaining the campaign.
A compliance campaign is a targeted directive on a particular issue; they happen when the IRS determines that there are taxpayer issues which require a response from the agency.
The OVDP was introduced in 2014 to encourage disclosures of unintendedhiding assets overseas; the intent being to give them a way to come into compliance, pay some stiff penalties, but avoid criminal prosecution.
Now the IRS intends to find taxpayers who used OVDP, but have since fallen out of compliance, and will use its audit-based tools in order to bring them back into compliance.
The letters are likely to be signed by John Cardone, the IRS' director of Withholding and International Individual Compliance. Though initially taking a ‘soft' stance, they still pose the risk to US taxpayers that, once an examination begins, criminal charges could follow, says law firm Dentons.
According to the IRS, the campaigns were identified through LB&I data analysis and suggestions from IRS employees. The goal of the campaigns is to improve return selection, identify issues representing a risk of non-compliance, and make the greatest use of limited resources. To date, LB&I has announced a total of 59 compliance campaigns.
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