In a previous article, I discussed the recent IRS announcement with respect to the closure of the IRS Offshore Voluntary Disclosure Program (“OVDP”) on September 28, 2018. Today, I would like to predict the range of the 2018 post-OVDP options for offshore voluntary disclosures starting October of 2018.
2018 Post-OVDP Options: Streamlined Compliance Procedures
As of October 1, 2018, taxpayers will still be able to utilize the Streamlined Compliance Procedures to complete their voluntary disclosures with respect to their foreign income and foreign assets. This option will be available only to taxpayers who will be able to certify that their prior noncompliance with US international tax laws was non-willful.
There are two variations within the Streamlined Compliance Procedures that are available to taxpayers depending on their residency: Streamlined Domestic Offshore Procedures (“SDOP”) and Streamlined Foreign Offshore Procedures (“SFOP”). I expect both options to be available on October 1, 2018 and even into 2019.
I should emphasize, however, that the existence of Streamlined Compliance Procedures is by no means assured in the future. As I have stated in the article that predicted the demise of the OVDP, there may be a point in the future (and it can be a near future – 2020 or 2021) when even these procedures will be affected. It is more likely that SFOP will survive for a longer period of time than SDOP.
Nevertheless, the Streamlined Compliance Procedures is a very popular option. In fact, according to the IRS, about 65,000 taxpayers have used it since its creation in 2014). This is a very high dis-incentive for the IRS to end this option.
2018 Post-OVDP Options: Delinquent FBAR Submission Procedures
I fully expect the Delinquent FBAR Submission Procedures to be available as of October 1, 2018. In one form or another, this option has always existed within the IRS. First, it was an informal understanding of the IRS that, in the absence of income tax noncompliance and other aggravating factors, there would be no FBAR penalties. Then, this option was “codified” as FAQ #17 within the OVDP programs.
In 2014, the Delinquent FBAR Submission Procedures became an independent option. Of course, now, this is a somewhat harsher option.
2018 Post-OVDP Options: Delinquent International Information Return Submission Procedures
I expect that this option will continue to exist as of October 1, 2018. Similarly to FBAR, it used to be a part of various OVDPs as FAQ #18. Now, Delinquent International Information Return Submission Procedures is a separate option which requires a reasonable cause explanation.
2018 Post-OVDP Options: IRS-Criminal Investigation Voluntary Disclosure Program (CI-VDP)
This option has existed for a very long time; it just faded into obscurity during the existence of OVDP. Now, it will surge back to life as it becomes almost the default option for a voluntary disclosure for US taxpayers who willfully violated their US tax obligations. In fact, I now expect CI-VDP to become a very valuable voluntary disclosure option (similar to what it used to be prior to 2009 OVDP).
2018 Post-OVDP Options: Reasonable Cause “Noisy” Disclosures
Since Reasonable Cause Disclosures (a/k/a “Noisy Disclosures”) are based on statutory law and not on any IRS programs, I fully expect this voluntary disclosure option to be available on October 1, 2018.
Contact Sherayzen Law Office for Professional Help With the Voluntary Disclosure of Your Foreign Assets and Foreign Income
If you have been unable to comply with US international tax laws concerning the reporting of foreign assets (including foreign accounts) and foreign income, contact Sherayzen Law Office for professional help.
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