Since 2008, the Internal Revenue Service has used both the stick (the threat of criminal prosecution) and the carrot (a series of voluntary disclosure initiatives) to bring taxpayers into compliance with their obligations to report offshore accounts and assets. On June 26, 2012, the IRS issued two separate, but related, press releases. The first release touted the success of the IRS’s recent initiatives, announcing that voluntary disclosures made under the 2009 Offshore Voluntary Disclosure Program (2009 OVDP) and the 2011 Offshore Voluntary Disclosure Initiative (2011 OVDI) have yielded more than $5 billion in back taxes, interest and penalties.1 In connection with this announcement, the IRS released long-awaited guidance with respect to the third application of its use of the long-standing Voluntary Disclosure Practice to offshore reporting compliance: the 2012 Offshore Voluntary Disclosure Program (2012 OVDP). Simultaneously, the IRS’s second press release announced new procedures to address the special challenges faced by U.S. and dual citizens who reside overseas.2

While both announcements will enable practitioners to more clearly advise previously non-compliant taxpayers, the success of the 2009 OVDP and the 2011 OVDI was largely attributable to taxpayer concerns that the IRS would discover their historical non-reporting. As a result, the level of participation in the 2012 OVDP will likely depend on whether noncompliant taxpayers perceive there to be a credible threat of detection.

Compliance Initiatives

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]