IRS Revoking Voluntary Disclosures

It appears that the IRS is revoking numerous Offshore Voluntary Disclosure Program (OVDP) acceptance letters. These letters were sent after the taxpayers had filed all required 1040, FBAR and associated documentation going back 8 years, and after IRS determination that the taxpayer was not already flagged to them by some other means. This information was received from Virginia LaTorre Jeker, a member of the ACA Professional Tax Advisory Council, who mentions it in her March 2013 blog (Let's Talk About: US Tax Doing a 180 — IRS Revokes Acceptance Into OVDP!)

This new IRS bait-and-switch is an outrageous violation of all commonly held notions of due process. It is devastating for Americans residing overseas who are trying to become compliant. The latest IRS pirouette is viewed as unusually cynical by filers and tax professionals alike, many of whom now have no reason to believe that the OVDP promises anything other than destitution. As Virginia concludes, potential OVDP participants are “damned if they do; and damned if they don’t.”

ACA in no way condones tax evasion. The IRS inflexible “one size fits all” approach discriminates against Americans abroad since the OVDP is focused on assets held in overseas financial institutions and Americans abroad by necessity have assets held overseas. ACA is pushing Congress to adopt residence-based taxation along with a specific program allowing Americans abroad to make themselves known to the IRS without the unjustified life-destroying penalties and criminal prosecution threats under the current law.

(March 2013)

Last Updated March 14, 2013