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Abstract: 

The IRS Offshore Voluntary Disclosure Program (OVDP) allows taxpayers to pre-emptively confess their undeclared foreign assets and foreign income, pay back taxes, avoid criminal prosecution, and cap their penalties. But the OVDP was criticized for applying to non-willful taxpayers (like immigrants and expats) who didn’t know to report their foreign accounts the same penalties that were imposed on more culpable actors, such as businessmen who diverted income to “secret” accounts in tax haven jurisdictions. The Streamlined Filing Compliance Procedures were introduced to allow more benign, non-willful taxpayers to come into tax compliance with far lower penalties. The Streamlined procedures appear to indicate a kinder, gentler IRS that is focused more on encouraging compliance than exacting penalties, and thus far have been extremely successful for both taxpayers and the IRS. But there’s a catch: The Streamlined procedures are not without risk, and clients often believe that they are less “willful” than the IRS might conclude. Practitioners must carefully vet their clients to determine whether they are qualified for the Streamlined procedures.

Keywords: offshore tax compliance; Streamlined Filing Compliance Procedures; Streamlined Domestic Offshore Procedueres; SDOP; Streamlined Foreign Offshore Procedueres; SFOP; Offshore Voluntary Disclosure Program; OVDP

Affiliations:  1: Rubinstein & Rubinstein, LLP.