Scarinci Hollenbeck, LLC
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201-896-4100 info@sh-law.comFirm Insights
Author: Scarinci Hollenbeck, LLC
Date: April 5, 2018
The Firm
201-896-4100 info@sh-law.comIn addition to individuals, entities, such as corporations, partnerships and trusts are also eligible to make voluntary disclosures.
The key benefits of OVDP include the protection from criminal prosecution, as well as a more favorable penalty structure. Pursuant to the provisions of the voluntary disclosure practice, the IRS will not recommend criminal prosecution to the Department of Justice (DOJ) for any issue relating to tax noncompliance or failure to file Report of Foreign Bank and Financial Accounts (FBAR).
However, taxpayers must comply with the following requirements:
It is important to highlight that the ability to pay is not necessarily a condition of the OVDP. The terms of the program generally require the taxpayer to pay the tax, interest, offshore penalty, and accuracy-related penalty, and, if applicable, the failure-to-file and failure-to-pay penalties in connection with the voluntary disclosure submission. However, it is possible for a taxpayer who is unable to make full payment of these amounts to request the IRS to consider other payment arrangements.
The burden is on the taxpayer to establish the inability to pay, to the satisfaction of the IRS, based on full disclosure of all assets and income sources, domestic and foreign, under the taxpayer’s control. Assuming that the IRS determines that the inability to fully pay is genuine, the taxpayer can often work out other financial arrangements with the IRS to resolve all outstanding liabilities and still participate in the program.
Taxpayers should consult with qualified tax and legal advisors when considering and making a voluntary disclosure. Given that the OVDP is closing in September, time is of the essence. If you have questions or concerns, Scarinci Hollenbeck’s experienced tax attorneys stand ready to assist.
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