Tuesday, March 27, 2018

Pass-Through Guidance Out By Summer At Earliest, IRS Says

The Internal Revenue Service will likely issue further guidance on the rule that affects how pass-through entities are taxed under the new federal tax law by late summer or early fall, the agency’s top official said Monday.

David Kautter, the acting IRS commissioner and Treasury assistant secretary for tax policy, said the IRS was working to provide answers surrounding this provision of the rule, Internal Revenue Code § 199A, in the wake of the federal tax overhaul. The guidance is essentially being built from the ground up.


Until then advice to client should be limited.  If late summer means early fall...will there be any time to plan?

Monday, March 19, 2018

Will the IRS Increase Criminal Prosecutions Now That the OVDP Program is Ending?


 As previously reported the IRS has announced that the offshore voluntary disclosure program (OVDP) will be closing on September 28, 2018. It appears that the program which began in 2009 only had 56,000 taxpayers who used one of the programs to comply voluntarily. This is an underwhelming number of taxpayers. Indeed they were only 600 disclosures in 2017. What does that mean?

 Since 2009, the IRS criminal investigation unit has investigated 1545 taxpayers on criminal violations related to international activities, of which 671 were indicted on international criminal tax violations.

 The IRS is now sending a clear signal that rather than relying on the voluntary disclosure program it will increase criminal prosecutions to effect compliance. Those who have not complied should heed this warning and file a disclosure before the deadline or otherwise face criminal prosecution!

 

Thursday, March 15, 2018

IRS to end offshore voluntary disclosure program; Taxpayers with undisclosed foreign assets urged to come forward now


The Internal Revenue Service today announced it will begin to ramp down the 2014 Offshore Voluntary Disclosure Program (OVDP) and close the program on Sept. 28, 2018. By alerting taxpayers now, the IRS intends that any U.S. taxpayers with undisclosed foreign financial assets have time to use the OVDP before the program closes. “Taxpayers have had several years to come into compliance with U.S. tax laws under this program,” said Acting IRS Commissioner David Kautter. “All along, we have been clear that we would close the program at the appropriate time, and we have reached that point. Those who still wish to come forward have time to do so.”

Since the OVDP's initial launch in 2009, more than 56,000 taxpayers have used one of the programs to comply voluntarily. All told, those taxpayers paid a total of $11.1 billion in back taxes, interest and penalties. The planned end of the current OVDP also reflects advances in third-party reporting and increased awareness of U.S. taxpayers of their offshore tax and reporting obligations.

The number of taxpayer disclosures under the OVDP peaked in 2011, when about 18,000 people came forward. The number steadily declined through the years, falling to only 600 disclosures in 2017.

The current OVDP began in 2014 and is a modified version of the OVDP launched in 2012, which followed voluntary programs offered in 2011 and 2009. The programs have enabled U.S. taxpayers to voluntarily resolve past non-compliance related to unreported foreign financial assets and failure to file foreign information returns.

Tax Enforcement

The IRS notes that it will continue to use tools besides voluntary disclosure to combat offshore tax avoidance, including taxpayer education, Whistleblower leads, civil examination and criminal prosecution. Since 2009, IRS Criminal Investigation has indicted 1,545 taxpayers on criminal violations related to international activities, of which 671 taxpayers were indicted on international criminal tax violations. “The IRS remains actively engaged in ferreting out the identities of those with undisclosed foreign accounts with the use of information resources and increased data analytics,” said Don Fort, Chief, IRS Criminal Investigation. “Stopping offshore tax noncompliance remains a top priority of the IRS.”

Streamlined Procedures and Other Options

A separate program, the Streamlined Filing Compliance Procedures, for taxpayers who might not have been aware of their filing obligations, has helped about 65,000 additional taxpayers come into compliance. The Streamlined Filing Compliance Procedures will remain in place and available to eligible taxpayers. As with OVDP, the IRS has said it may end the Streamlined Filing Compliance Procedures at some point.

Because the circumstances of taxpayers with foreign financial assets vary widely, the IRS will continue offering the following options for addressing previous failures to comply with U.S. tax and information return obligations with respect to those assets:

  • IRS-Criminal Investigation Voluntary Disclosure Program;
  • Streamlined Filing Compliance Procedures;
  • Delinquent FBAR submission procedures; and
  • Delinquent international information return submission procedures.