OECD Harmful Tax Practices & FDII | International Tax Law Firm

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The Organization for Economic Co-operation and Development (“OECD”) has detailed base erosion and profit-shifting (“BEPS”) rules. Among these rules are the OECD rules for countering harmful tax practices (“OECD Harmful Tax Practices Rules”). The 2017 Tax Cuts and Jobs Act introduced a new tax concept in the US Internal Revenue Code – foreign-derived intangible income (“FDII”). FDII has become a hot topic in international tax law, especially with respect to whether FDII constitutes a violation of the OECD Harmful Tax Practices Rules.

OECD Harmful Tax Practices Rules and Preferential Tax Regimes

The OECD Harmful Tax Practices Rules require that a preferential tax regime of any OECD nation satisfies the “substantial activities requirement”. In particular, the Intellectual Property income regimes must incorporate the “nexus approach” that limits the entitlement to the preferential tax regime based on the amount of the qualifying research and development costs incurred.

European Position: FDII May Violate OECD Harmful Tax Practices Rules

The Europeans started questioning the FDII’s compliance with the OECD Harmful Tax Practices Rules almost immediately. The main reason for their concern is that the FDII regime does not adopt the nexus approach while allowing US corporations to deduct 37.5% of their deemed intangible income generated abroad by the usage of the US Intellectual Property. The end-result of the FDII rules is the reduction of the effective tax rate on the FDII to a bit over 13%.

The Europeans question whether this result and the FDII rules in general are in conformity with BEPS’ minimum standards and the EU blacklist criteria.

US Position: FDII Does Not Violate OECD Harmful Tax Practices

The Department of the Treasury officials adopted a position exactly opposite to the Europeans (which is not surprising at all). The United States believes that the FDII rules only superficially resemble harmful tax practices, but, in reality, they are very different from traditional preferential tax regimes.

The United States urges the Europeans to consider the FDII tax regime in the context of the overall tax reform that is intended to equalize minimum tax rate that applies to foreign activities of a US corporation regardless of whether the income is earned directly by the US corporation or through it subsidiary (which would be classified as a CFC).

In other words, the FDII rules have a different purpose and effect when one looks at the broader context. They are designed to take away a tax incentive to transfer IP out of the United States into a low-tax foreign subsidiary . Therefore, according to the Department of the Treasury, the FDII tax regime will not create any harm that the OECD Harmful Tax Practices Rules were designed to prevent.

FDII Compliance With the OECD Harmful Tax Practices Rules Will Continue to Be in Dispute

The FDII rules’ compliance with the OECD Harmful Tax Practices Rules will continue to be a matter of debate and conflict between the United States and the EU countries. Additionally, there are very strong objections from the Europeans to the FDII rules from the WTO perspective. This conflict will likely grow into a formal legal dispute between the two economic giants.

Sherayzen Law Office will continue to follow this new dispute between the EU and the United States.

3 Main Streamlined Domestic Compliance Disadvantages | SDOP Lawyer

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In a previous article, I described the three main advantages of doing an offshore voluntary disclosure through Streamlined Domestic Offshore Procedures (“Streamlined Domestic Compliance”). Today, I would like to discuss three main Streamlined Domestic Compliance disadvantages.

Streamlined Domestic Compliance Disadvantages: Audit Risks

The first main disadvantage of Streamlined Domestic Compliance is the potential IRS audit within three years after the voluntary disclosure is completed. The audit is likely to include everything: FBARs, amended tax returns, Miscellaneous Offshore Penalty calculation and, most importantly, the determination of non-willfulness.

The potential IRS audit stands in a shark contrast to the IRS flagship Offshore Voluntary Disclosure Program (“OVDP”) which closed in September of 2018. At the end of a voluntary disclosure through OVDP, the taxpayer and the IRS sign the Closing Agreement, which (absent fraud or material mis-statements) effectively closes prior tax noncompliance issues forever.

The audit risks may be particularly important to taxpayers who are in the process of obtaining their US citizenship or US permanent residence.

Streamlined Domestic Compliance Disadvantages: Penalty Base Not Limited to Income Noncompliance

One of the main Streamlined Domestic Compliance disadvantages is the fact that the calculation of the penalty base (i.e. what assets are subject to the 5% penalty) includes assets that never produced any foreign income. Moreover, the penalty base includes a foreign asset even if the foreign income from this asset was timely disclosed on the taxpayer’s original tax return, but the asset itself was not reported on FBAR or any other international information return.

In other words, a taxpayer who participates in the Streamlined Domestic Compliance should be prepared to pay a 5% penalty even on assets that are compliant with the US income tax laws.

Again, this is contrary to the rules of the OVDP. In the OVDP, only assets that are tied to income tax noncompliance are included in the penalty base.

Streamlined Domestic Compliance Disadvantages: Danger of Superficial Analysis

Finally, the danger of superficial analysis concerning non-willfulness constitutes the third main disadvantage of the Streamlined Domestic Compliance. In reality, there are two dangers which should be placed at the opposite ends of the voluntary disclosure continuum.

The first danger is the natural bias in the self-assessment of non-willfulness. Oftentimes, a taxpayer may exaggerate the facts in his favor while selectively ignoring the facts that may establish willful noncompliance. This is very natural. It is difficult to find a person who will state outright that he was willful in his prior tax noncompliance.

Usually, this problem can be (and should be) fixed by retaining an international tax attorney to do an independent assessment of the taxpayer’s non-willfulness.

At the opposite end is the danger of concentrating on non-willfulness and ignoring the possibility of doing a Reasonable Cause disclosure. In most cases, this is not a problem because Streamlined Domestic Compliance would be a superior choice despite the 5% penalty. This, however, is not true in all cases and real opportunities are often lost by failure to explore this route.

I should state that the biggest problem that I found in my practice is the fact that some taxpayers do not consult an international tax attorney on this issue. Instead, they try to do everything themselves even though they have no specialized knowledge in this field. I strongly discourage this practice.

I believe that the involvement of an international tax attorney is essential to doing a proper offshore voluntary disclosure.

Contact Sherayzen Law Office for Professional Help with Your Offshore Voluntary Disclosure

Choosing the correct offshore voluntary disclosure path is the most important decision for a taxpayer who wishes to remedy his past noncompliance with US tax laws. Every voluntary disclosure option has its advantages and disadvantages. All essential factors must be considered.

The failure to do proper legal analysis may have highly negative legal and tax consequences. It may even put a taxpayer in a position worse than what he was prior to his attempt to do a voluntary disclosure.

This is why you need the professional help of Sherayzen Law Office. Our experienced legal team has helped hundreds of US taxpayers to do their offshore voluntary disclosures properly. We Can Help You! Contact Us Today to Schedule Your Confidential Consultation!

2017 FBAR Currency Conversion Rates | FBAR Lawyer and Attorney

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Using proper currency conversion rates is a very important part of preparing 2017 FBAR and 2017 Form 8938. The instructions to both forms require (in case of FATCA Form 8938, this is the default choice) US taxpayers to use the 2017 FBAR Currency Conversion Rates published by the Treasury Department. The 2017 FBAR Currency Conversion Rates may also be used for other purposes, not just the preparation of the 2017 FBAR and Form 8938.

The 2017 FBAR Currency Conversion Rates are the December 31, 2017 rates officially published by the U.S. Department of Treasury (they are called “Treasury’s Financial Management Service rates” or the “FMS rates”) and they are the proper conversion rates that must be used while preparing FBAR and Form 8938.

Due to this importance of the 2017 FBAR Currency Conversion Rates to US taxpayers, international tax lawyers and international tax accountants, Sherayzen Law Office provides the table below the official 2017 FBAR Currency Conversion Rates (keep in mind, you still need to refer to the official website for any updates).

Country – Currency

Foreign Currency to $1.00
AFGHANISTAN – AFGHANI

69.3200
ALBANIA – LEK

110.6000
ALGERIA – DINAR

114.6590
ANGOLA – KWANZA

170.0000
ANTIGUA – BARBUDA – E. CARIBBEAN DOLLAR

2.7000
ARGENTINA – PESO

19.1600
ARMENIA – DRAM

485.0000
AUSTRALIA – DOLLAR

1.2790
AUSTRIA – EURO

0.8330
AZERBAIJAN – NEW MANAT

1.7100
BAHAMAS – DOLLAR

1.0000
BAHRAIN – DINAR

0.3770
BANGLADESH – TAKA

82.0000
BARBADOS – DOLLAR

2.0200
BELARUS – NEW RUBLE

1.9730
BELGIUM – EURO

0.8330
BELIZE – DOLLAR

2.0000
BENIN – CFA FRANC

562.3300
BERMUDA – DOLLAR

1.0000
BOLIVIA – BOLIVIANO

6.8600
BOSNIA – HERCEGOVINA – MARKA

1.6300
BOTSWANA – PULA

9.8040
BRAZIL – REAL

3.3120
BRUNEI – DOLLAR

1.3420
BULGARIA – LEV

1.6310
BURKINA FASO – CFA FRANC

562.3300
BURMA – KYAT

1354.0000
BURUNDI – FRANC

1720.0000
CAMBODIA (KHMER) – RIEL

4103.0000
CAMEROON – CFA FRANC

567.7900
CANADA – DOLLAR

1.2550
CAPE VERDE – ESCUDO

92.0260
CAYMAN ISLANDS – DOLLAR

0.8200
CENTRAL AFRICAN REPUBLIC – CFA FRANC

567.7900
CHAD – CFA FRANC

567.7900
CHILE – PESO

614.2300
CHINA – RENMINBI

6.5040
COLOMBIA – PESO

2981.7900
COMOROS – FRANC

411.0000
CONGO – CFA FRANC

567.7900
CONGO, DEM. REP – CONGOLESE FRANC

1580.0000
COSTA RICA – COLON

564.0000
COTE D’IVOIRE – CFA FRANC

562.3300
CROATIA – KUNA

6.2300
CUBA – PESO

1.0000
CYPRUS – EURO

0.8330
CZECH REPUBLIC – KORUNA

20.8840
DENMARK – KRONE

6.2070
DJIBOUTI – FRANC

177.0000
DOMINICAN REPUBLIC – PESO

48.1100
ECAUDOR – DOLARES

1.0000
EGYPT – POUND

17.7300
EL SALVADOR – DOLARES

1.0000
EQUATORIAL GUINEA – CFA FRANC

567.7900
ERITREA – NAKFA

15.0000
ESTONIA – EURO

0.8330
ETHIOPIA – BIRR

27.2000
EURO ZONE – EURO

0.8330
FIJI – DOLLAR

2.0170
FINLAND – EURO

0.8330
FRANCE – EURO

0.8330
GABON – CFA FRANC

567.7900
GAMBIA – DALASI

47.0000
GEORGIA – LARI

2.6100
GERMANY FRG – EURO

0.8330
GHANA – CEDI

4.5200
GREECE – EURO

0.8330
GRENADA – EAST CARIBBEAN DOLLAR

2.7000
GUATEMALA – QUENTZAL

7.3300
GUINEA – FRANC

9004.0000
GUINEA BISSAU – CFA FRANC

562.3300
GUYANA – DOLLAR

215.0000
HAITI – GOURDE

62.9500
HONDURAS – LEMPIRA

23.5000
HONG KONG – DOLLAR

7.8150
HUNGARY – FORINT

258.4500
ICELAND – KRONA

104.0900
INDIA – RUPEE

63.7500
INDONESIA – RUPIAH

13490.0000
IRAN – RIAL

36057.0000
IRAQ – DINAR

1166.0000
IRELAND – EURO

0.8330
ISRAEL – SHEKEL

3.4710
ITALY – EURO

0.8330
JAMAICA – DOLLAR

128.0000
JAPAN – YEN

112.5500
JERUSALEM – SHEKEL

3.4710
JORDAN – DINAR

0.7080
KAZAKHSTAN – TENGE

331.3100
KENYA – SHILLING

103.2000
KOREA – WON

1065.9301
KUWAIT – DINAR

0.3010
KYRGYZSTAN – SOM

69.0000
LAOS – KIP

8274.0000
LATVIA – EURO

0.8330
LEBANON – POUND

1500.0000
LESOTHO – SOUTH AFRICAN RAND

12.3160
LIBERIA – U.S. DOLLAR

125.1700
LIBYA – DINAR

1.3570
LITHUANIA – LITAS

0.8330
LUXEMBOURG – EURO

0.8330
MACAO – MOP

8.0000
MACEDONIA FYROM – DENAR

51.0700
MADAGASCAR – ARIA

3235.6201
MALAWI – KWACHA

731.0000
MALAYSIA – RINGGIT

4.0440
MALI – CFA FRANC

562.3300
MALTA – EURO

0.8330
MARSHALL ISLANDS – DOLLAR

1.0000
MARTINIQUE – EURO

0.8330
MAURITANIA – OUGUIYA

355.0000
MAURITIUS – RUPEE

33.4000
MEXICO – NEW PESO

19.7040
MICRONESIA – DOLLAR

1.0000
MOLDOVA – LEU

17.0580
MONGOLIA – TUGRIK

2427.3999
MONTENEGRO – EURO

0.8330
MOROCCO – DIRHAM

9.3520
MOZAMBIQUE – METICAL

58.8500
NAMIBIA – DOLLAR

12.3160
NEPAL – RUPEE

102.4000
NETHERLANDS – EURO

0.8330
NETHERLANDS ANTILLES – GUILDER

1.7800
NEW ZEALAND – DOLLAR

1.4050
NICARAGUA – CORDOBA

30.6000
NIGER – CFA FRANC

562.3300
NIGERIA – NAIRA

359.0000
NORWAY – KRONE

8.1960
OMAN – RIAL

0.3850
PAKISTAN – RUPEE

110.4000
PALAU – DOLLAR

1.0000
PANAMA – BALBOA

1.0000
PAPUA NEW GUINEA – KINA

3.1350
PARAGUAY – GUARANI

5574.0000
PERU – NUEVO SOL

3.2360
PHILIPPINES – PESO

49.8490
POLAND – ZLOTY

3.4830
PORTUGAL – EURO

0.8330
QATAR – RIYAL

3.6400
ROMANIA – LEU

3.8800
RUSSIA – RUBLE

57.8450
RWANDA – FRANC

855.0000
SAO TOME & PRINCIPE – DOBRAS

20597.2227
SAUDI ARABIA – RIYAL

3.7500
SENEGAL – CFA FRANC

562.3300
SERBIA – DINAR

101.3300
SEYCHELLES – RUPEE

13.3800
SIERRA LEONE – LEONE

7645.0000
SINGAPORE – DOLLAR

1.3360
SLOVAK REPUBLIC – EURO

0.8330
SLOVENIA – EURO

0.8330
SOLOMON ISLANDS – DOLLAR

7.4910
SOMALI – SHILLING

575.0000
SOUTH AFRICA – RAND

12.3160
SOUTH SUDANESE – POUND

126.0000
SPAIN – EURO

0.8330
SRI LANKA – RUPEE

153.4000
ST LUCIA – EC DOLLAR

2.7000
SUDAN – SUDANESE POUND

9.0000
SURINAME – GUILDER

7.5200
SWAZILAND – LILANGENI

12.3160
SWEDEN – KRONA

8.1930
SWITZERLAND – FRANC

0.9750
SYRIA – POUND

515.0000
TAIWAN – DOLLAR

29.6460
TAJIKISTAN – SOMONI

8.7500
TANZANIA – SHILLING

2235.0000
THAILAND – BAHT

32.6000
TIMOR – LESTE – DILI

1.0000
TOGO – CFA FRANC

562.3300
TONGA – PA’ANGA

2.1140
TRINIDAD & TOBAGO – DOLLAR

6.6300
TUNISIA – DINAR

2.4580
TURKEY – LIRA

3.7880
TURKMENISTAN – MANAT

3.4910
UGANDA – SHILLING

3635.0000
UKRAINE – HRYVNIA

28.1450
UNITED ARAB EMIRATES – DIRHAM

3.6730
UNITED KINGDOM – POUND STERLING

0.7400
URUGUAY – PESO

28.7600
UZBEKISTAN – SOM

8030.0000
VANUATU – VATU

105.0000
VENEZUELA – BOLIVAR

3345.0000
VIETNAM – DONG

22708.0000
WESTERN SAMOA – TALA

2.4400
YEMEN – RIAL

250.5000
ZAMBIA – NEW KWACHA

9.9750
ZAMBIA – KWACHA

5455.0000
ZIMBABWE – DOLLAR

1.0000

Streamlined Domestic Disclosure: Main Advantages | SDOP Attorney

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At this point, Streamlined Domestic Offshore Procedures (“Streamlined Domestic Disclosure”) is undoubtedly the most popular offshore voluntary disclosure option. Let’s explore three main reasons for this preference of Streamlined Domestic Disclosure among US taxpayers.

Streamlined Domestic Disclosure: Background Information and General Requirements

The IRS created the Streamlined Domestic Disclosure as an offshore voluntary disclosure option on June 18, 2014. The IRS specifically the designed Streamlined Domestic Disclosure to address the critique of many practitioners and taxpayers that the 2012 OVDP did not adequately deal with US taxpayers who non-willfully violated their US tax obligations (for example, in cases where the taxpayers simply did not know about the existence of FBAR or Form 8938).

Any taxpayer can participate in the Streamlined Domestic Disclosure as long as he satisfies all three parts of the eligibility criteria: US tax residency, absence of IRS examination or investigation and non-willfulness.

If a taxpayer satisfies the eligibility criteria, he then must comply with all of the required submissions. The key requirement here is the certification under the penalty of perjury that the taxpayer’s prior tax noncompliance was non-willful. This requirement is the heart of the Streamlined Domestic Disclosure and must be approached with special care.

The other requirements include filing of amended tax returns for the past three years (with all of the necessary information returns), filing FBARs for the past six years, payment of tax due with interest and payment of Miscellaneous Offshore Penalty. Other requirements may also apply depending on the specific situation of a taxpayer.

Streamlined Domestic Disclosure Offers a Number of Advantages to Noncompliant US Taxpayers

While the list of the requirements above may seem like a lot of work, in reality, Streamlined Domestic Disclosure definitely offers a number of advantages compared to other offshore voluntary disclosure options. I will discuss in this article only the main three advantages.

Keep in mind that the Streamlined Domestic Disclosure may not always be advantages to taxpayers. There are plenty of situations where other offshore voluntary disclosure options may be superior to Streamlined Domestic Disclosure.

I also wish to emphasize that the analysis of advantages or disadvantages of a particular voluntary disclosure option is highly fact-specific. I strongly recommend that you contact Sherayzen Law Office for a detailed analysis of your voluntary disclosure options before you even attempt to proceed with your offshore voluntary disclosure.

Advantages of Streamlined Domestic Disclosure: Flexible Risk Management

One of the greatest advantages (though, the one rarely discussed on the Internet) of the Streamlined Domestic Disclosure is the opportunity this option offers to manage the voluntary disclosure risks. We can be even more precise – to manage the risk-reward ratio.

There is no doubt that the now closed OVDP (the 2014 IRS Offshore Voluntary Disclosure Program) may have been the safest option available in the great majority of cases, but its “rewards” in terms of penalty rate, calculation of Penalty Base and other factors are generally (though, not always) inferior to those of the Streamlined Domestic Disclosure. Noisy Disclosures stand at the opposite end of the spectrum compared to the OVDP.

Streamlined Domestic Disclosure, however, occupies the middle ground. You only have to establish non-willfulness, not reasonable cause. This is a much lower standard. Moreover, this standard is applied to all international information returns, not just FBARs. At the same time, the penalty rate (see below) is generally far more advantageous than that of the OVDP.

Advantages of Streamlined Domestic Disclosure: Relatively Low Penalty Rate

One of the most cited advantages of the Streamlined Domestic Disclosure is the low penalty rate of 5%. Compared to the OVDP penalty rate of 27.5% or FBAR non-willful penalties outside of a voluntary disclosure program, this can be a very advantageous option. This is not always the case, but it is true in most non-willful cases.

Advantages of Streamlined Domestic Disclosure: Shortened Voluntary Disclosure Period

Another great advantage of Streamlined Domestic Disclosure is the smaller number of years covered by the voluntary disclosure period. Unlike the OVDP voluntary disclosure period (which covers eight years of FBARs and tax returns), this voluntary disclosure option only encompasses the years which are covered by a regular statute of limitations.

In other words, it only includes the past six years of FBARs (occasionally seven) and past three years of tax returns. Obviously, this is a lot more convenient than OVDP.

A voluntary disclosure that involves an expatriation will require an increased number of amended tax returns.

Contact Sherayzen Law Office for Professional Help with Streamlined Domestic Disclosure

Despite having a much simpler procedure, Streamlined Domestic Disclosure may still be quite complex and require professional attention. There are a number of pitfalls that may seriously undermine the advantages of a Streamlined Domestic Disclosure. Sometimes, unrepresented taxpayers may also make mistakes that will result in a disastrous result during a subsequent IRS audit.

This is why you need the professional help from Sherayzen Law Office. Our experienced legal team has helped hundreds of US taxpayers with their Streamlined Domestic Disclosures, and We Can Help You! Contact Us Today to Schedule Your Confidential Consultation!

IRS OVDP to End on September 28, 2018 | US OVDP Tax Law Firm

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On March 13, 2018, the IRS announced that it will be closing its flagship 2014 Offshore Voluntary Disclosure (“OVDP”) program on September 28, 2018. The closure of the IRS OVDP was already predicted by Sherayzen Law Office last year. Let’s analyze further this important development.

Historical Overview of the IRS OVDP

I already provided a profound historical overview of the IRS OVDP in a previous article. Here, I would like to state a brief summary of this history.

The 2009 Offshore Voluntary Disclosure Program (“2009 OVDP”) was considered to be the first modern offshore voluntary disclosure program created by the IRS. There were voluntary disclosure initiatives in the earlier years (most notably 2004), but they lacked the sophistication, publicity and enforcement that characterized the post-UBS case IRS OVDPs.

The 2009 OVDP ended in October of that year, but its favorable results laid the foundation for the enormously successful 2011 Offshore Voluntary Disclosure Initiative (“2011 OVDI”). In fact, the 2011 OVDI turned out be such a hit that, after it ended, the IRS almost immediately instituted the “permanent” 2012 OVDP with many terms fairly similar to 2011 OVDI.

In 2014, the 2012 OVDP underwent a profound change with the creation of the Streamlined Domestic Offshore Procedures (“SDOP”) and the Streamlined Foreign Offshore Procedures (“SFOP”) as well as the split off of the old FAQ 17 and FAQ 18 into new Delinquent FBAR Submission Procedures and Delinquent International Information Returns Submission Procedures respectively. The changes to 2012 OVDP were so dramatic that the IRS and the practitioners treated the remaining part of the IRS OVDP as the 2014 OVDP.

Popularity of the IRS OVDP Changed Over Time

Since the introduction of the 2009 OVDP, more than 56,000 taxpayers participated in some version of the IRS OVDPs. Altogether, the IRS stated that “those taxpayers paid a total of $11.1 billion in back taxes, interest and penalties”.

The popularity of the IRS OVDP, however, changed over time. It really peaked with the 2011 OVDI – about 18,000 taxpayers participated in this program. The numbers have declined ever since; the decline greatly accelerated with the 2014 introduction of SDOP and SFOP. In fact, the IRS stated that only 600 disclosures were made through the IRS OVDP in the entire year 2017.

IRS OVDP: Its Importance Today and Who Will Be Affected Most by Its Closure

Today, the IRS OVDP remains the main voluntary disclosure option for US taxpayers who willfully failed to comply with their US international tax obligations. In fact, this is the best option available to these willful taxpayers. The IRS-Criminal Investigation Voluntary Disclosure Program (CI-VDP) does not offer any of the assurances on the penalty limitations that the IRS OVDP offers today.

It is important to point out, however, that the IRS OVDP can be a desirable voluntary disclosure option not only to willful taxpayers, but also to taxpayers who were non-willful in their inability to comply with the complex US international tax laws.

There are at least two categories of these non-willful taxpayers who will be affected by the impending closure of the IRS OVDP. First, the taxpayers who were non-willful, but lack sufficient proof to establish their non-willfulness in the SDOP or SFOP. In such cases, IRS OVDP offered a prudent, even if more expensive way to deal with prior tax noncompliance.

Second, due to the fact that the IRS OVDP does not impose penalties on unreported foreign assets that were not related to income tax noncompliance, some non-willful taxpayers may find it more economically beneficial to go through the IRS OVDP rather than SDOP.

Finally, it should be remembered that the IRS OVDP is the only offshore voluntary disclosure option (besides CI-VDP) that offers a Closing Agreement – i.e. a nearly guaranteed assurance that there will not be an IRS audit of prior years after the voluntary disclosure is completed, absent fraud and/or material mis-statements of fact.

Why Did the IRS Decide to End IRS OVDP?

The reasons that IRS listed today for the closure of the IRS OVDP are practically the same as what I stated in my article last year, when I predicted the likely closure of the IRS OVDP.

First, the IRS stated that the “end of the current OVDP also reflects advances in third-party reporting and increased awareness of U.S. taxpayers of their offshore tax and reporting obligations.” In other words, as I have previously wrote, the existing voluntary disclosure options are rapidly losing value as a source of new information regarding offshore noncompliance with US taxes. Third-party reporting has overtaken the OVDP in this respect due to the huge and continuously expanding network (especially the FATCA network) of automatic information exchange between the IRS and foreign financial institutions.

Second, as I warned in November of 2017, there has been a systemic change to a different model of tax administration. The IRS noted that “it will continue to use tools besides voluntary disclosure to combat offshore tax avoidance, including taxpayer education, Whistleblower leads, civil examination and criminal prosecution.”

This means that the IRS is shifting away from processing broad voluntary disclosure programs while it is embracing the model of focused enforcement. This is precisely why the IRS created the issued-based LB&I Compliance Campaigns. Hence, we now entered into a phase where various enforcement channels will dominate the IRS efforts to implement US international tax laws.

Do US Taxpayers Still Have Time to do a Voluntary Disclosure Through IRS OVDP?

Yes, the taxpayers who wish to utilize the IRS OVDP option will still be able to do it through September 28, 2018.

Contact Sherayzen Law Office if You Wish to Explore Your Voluntary Disclosure Options, Including IRS OVDP

If you a US taxpayer who has undisclosed foreign assets and foreign income, you should contact Sherayzen Law Office for professional help. Our highly experienced international tax law firm has helped hundreds of US taxpayers to successfully bring their US tax affairs into full compliance with US tax laws.

You will be working directly with an international tax lawyer and owner of Sherayzen Law Office, Mr. Eugene Sherayzen. He will thoroughly analyze the facts of your case, determine your US tax compliance requirements with respect to unreported foreign assets and foreign income, estimate your penalty exposure, and determine the available voluntary disclosure options.

Once a voluntary disclosure option is chosen, the highly professional team of Sherayzen Law Office will work with you and prepare all of the necessary tax forms and legal documents. We will guide you throughout the entire process, including IRS representation in case of an IRS challenge of your voluntary disclosure or an IRS audit.

We have helped taxpayers with assets from close to 70 countries around the world and We Can Help You! Contact Us Today to Schedule Your Confidential Consultation!