How Is the IRS Addressing Expatriation and Post OVDP Compliance?

 Posted on September 06,2019 in Tax Audits

In July 2019, the Internal Revenue Service Large Business and International Division announced that six new campaigns are being launched to help noncompliant taxpayers avoid criminal prosecution and/or civil penalties. These campaigns are part of an effort to allow taxpayers who are currently behind on their tax obligations to become compliant with the law. Two such campaigns address obligations related to foreign financial assets and expatriates. If you have unresolved tax issues related to foreign assets or are living outside the United States, these campaigns may be of special interest to you.

The Purpose of the Offshore Voluntary Disclosure Program

U.S. citizens or residents who make money outside the United States are still required to report this income to the Internal Revenue Service. Those who fail to report foreign assets and pay the associated taxes may be subject to civil penalties and even criminal prosecution. In 2009, the IRS created the Offshore Voluntary Disclosure Program (OVDP) as an avenue for taxpayers to avoid criminal liability and resolve outstanding tax debt related to foreign assets. This program ended in 2018. Because many former OVDP participants are still noncompliant with U.S. tax laws, the IRS has launched a number of new campaigns to address compliance issues.   

Post OVDP Relief and Expatriation

The IRS has recently announced a new campaign addressing individuals who had previously participated in the OVDP but have failed to remain compliant with foreign asset reporting. The Post OVDP Compliance campaign will identify problems that represent a risk of noncompliance. The IRS says it plans to address tax noncompliance through examinations (audits) and “soft letters,” which warn taxpayers that they may need to take steps to meet their reporting requirements.

Another campaign is aimed at individuals who expatriated from the United States after June 17, 2008. U.S. citizens and long-term residents who lived in the United States in 8 of the previous 15 years may not have fulfilled their tax obligations. Through the new expatriation campaign, the Internal Revenue Service will address noncompliance through audits, soft letters, and public outreach.

Contact a San Jose Tax Attorney

The experienced San Jose, CA tax compliance lawyer at John D. Teter Law Offices has the education, experience, and legal know-how to handle even the most complex tax issues. If you have outstanding tax debt related to foreign assets or offshore accounts, we will help you understand your legal options and determine the best way to take corrective action. Call us at 408-866-1810 to schedule a confidential consultation to discuss your concerns today.

Sources:

https://www.irs.gov/individuals/international-taxpayers/offshore-voluntary-disclosure-program

https://www.natlawreview.com/article/more-irs-campaigns-irs-announces-six-more-examination-campaigns