IRS talks offshore reporting and second chances

Expect changes to some offshore tax reporting forms and more IRS guidance on how to fill them out, says IRS lawyer Daniel Price. But don’t expect the programs to be around forever.

Price addressed STEP Canada’s national conference June 9 in Toronto. He works in the IRS’s office of the chief counsel in Austin, Texas.

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When Price asked the hundreds of trust and estate planners gathered whether they’d used the Offshore Voluntary Disclosure Program (OVDP) and the Streamlined Procedure for their clients. Fewer people put up their hands for the streamlined procedure than the OVDP. The streamlined procedure offers reduced penalties for U.S. persons with foreign financial interests who have neglected their tax duties.

He hopes that by next year’s conference, everyone’s hands go up.

The programs have been around in their current form since 2014. When asked how much longer they would be open, Price demurred. He said the IRS would close them when there was no longer a business need, and told attendees that if clients were considering using the program, to do it sooner rather than later.

The programs require three years of voluntary disclosures, but if a client has been non-compliant for much longer than that, Price says there’s still hope. If there’s no evidence your client willfully or fraudulently didn’t file their taxes, the IRS will likely “put blinders on” and focus only on the years filed in the disclosure, he says.

Read: Get clients compliant with the IRS

As of October 2015, the programs have received more than 54,000 applications, resulting in more than US$8 billion in tax collected.

He says the IRS is putting the finishing touches on new FAQs, webinars, and forms to help clarify the program’s rules. They’ll be public shortly.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.