Transitional Treatment for Pending OVDP Submissions
Taxpayers who have already initiated the Offshore Voluntary Disclosure process under previous programs may still be eligible for the reduced penalty structure offered by the New Streamlined Offshore Programs.
If your OVDP letter and attachments were submitted to the IRS prior to July 1, 2014, and you have not yet executed a Form 906, Closing Agreement or received Notice 609, a letter initiating examination upon opt-out, then you can request that your case be transitioned from the OVDP to one of the streamlined offshore programs. Taxpayers who have only submitted pre-clearance requests prior to July 1, 2014 will not be eligible for transitional treatment.
The major differences between the treatment of taxpayers who submit under new streamlined procedures and those who request transitional treatment are as follows:
- Transitioning taxpayers will still be required to submit eight years of amended returns, FBAR forms, and other informational returns. Streamlined procedures only require 3 years of amended returns and 6 years of FBARs.
- Transitioning taxpayers will be required to pay the tax, interest, and tax-related penalties for the eight years at issue. Tax-related penalties include the failure-to-pay penalty, the failure-to-file penalty, and the accuracy-related penalties. Taxpayers who are submitting their documents under streamlined procedures will not be liable for tax-related penalties.
Transitioning taxpayers will be required to submit a written statement, signed under penalties of perjury, that describes the facts and circumstances of their situation, as opposed to the form Certification Statement required of those submitting documents under the streamlined procedures.
Additional Taxpayer Information
Taxpayers whose requests for transitional treatment are granted will be eligible for a reduced 5% penalty or a waiver of all penalties, depending on their residency status. Taxpayers whose requests for transitional treatment are denied will have their case processed under the Offshore Voluntary Disclosure Program procedures for the disclosure program under which they originally submitted documents. They will still have the option of opting-out of the OVDP to request a reduction or waiver of penalties. However, a denial for transitional treatment may indicate that opt-out results could be harsh.
National Offshore Bank Account Lawyers
If you have additional questions about transitional treatment for pending OVDP submissions, contact the knowledgeable team of tax attorneys, former IRS agents and CPAs of Brown, PC at 817-870-0025 or toll free at 888-870-0025.