Foreign Asset Disclosure Noncompliance and Penalty Abatement After OVDP Closing

On Mar. 13. 2018, the IRS announced the closing of its OVDP, effective Sept. 28, 2018, while reaffirming Treasury’s continuing commitment to target foreign information reporting failures in its enforcement efforts. The ending of the OVDP removes a valuable program for U.S. taxpayers seeking to remedy delinquent or inaccurate required foreign asset disclosures.

The OVDP was established to provide incentives for taxpayers with exposure to potential criminal liability and civil penalties due to a willful failure to report foreign financial assets and pay outstanding tax resulting from that filing failure. OVDP granted protection from criminal liability for taxpayers who completed participation in the OVDP and provided participants with terms for resolving their tax and penalty obligations.

The closing announcement signaled the Service’s position that it would aggressively pursue foreign reporting noncompliance, given its belief that taxpayers are more aware of their foreign asset disclosure obligations. The announcement referenced remaining avenues for remedying foreign reporting failures, specifically the streamlined filing compliance procedures. However, the crucial takeaway from the closure of OVDP is that the Service will take a harder line with alleged willful failure to file required disclosures of foreign assets.

Listen as our experienced panel provides a practical guide to navigating the IRS foreign information disclosure and penalty abatement program in the wake of the OVDP closing.

1. OVDP- A brief history
2. Criminal Penalties
3. Remaining structured procedures
   1. Streamlined filing compliance procedures
   2. Streamlined Domestic Offshore Procedure for U.S. residents
   3. Streamlined Foreign Offshore Procedure for non-U.S. residents
   4. Delinquent FBAR Submission Procedure
   5. Delinquent International Return Submission Procedure
4. Noisy Disclosures vs. Quiet Disclosures
5. Penalty structures outside of formal IRS programs and procedures
6. Reasonable cause abatement standards
7. Willfulness and Reckless Disregard. Will you know it when you see it?
8. Going to Court
9. Tips for avoiding tax preparer malpractice or IRC 6694 penalties

The panel will review these and other priority issues:

• What are the penalty structures for non-willful and willful failure to file?
• What are the standards for “reasonable cause” abatement?
• What standards are used by the courts and the IRS to determine willfulness?
• How the remaining IRS streamlined procedures can be used to mitigate various penalties?

Learning Objectives

After completing this course, you will be able to:

• Identify what criminal and civil penalty mitigation features are ending with the closing of the OVDP for taxpayers whose failure to file required foreign asset information disclosures is deemed willful by the IRS
• Recognize the elements that will trigger the IRS determination of “willful” failure
• Understand the differences between noisy and quiet disclosures
• Determine what avenues are still available for penalty mitigation after the end of OVDP
• Navigate the penalty appeals process for streamlined filing compliance procedures—both foreign and domestic
• Limit your client’s exposure to jail time

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules, supervising other attorneys or accountants. Specific knowledge and understanding of foreign asset information reporting requirements, particularly FATCA and FBAR/FinCen 114; familiarity with IRS audit procedures in examining foreign tax reporting, familiarity with voluntary disclosure programs.

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IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).