IRS Makes Changes To Offshore Programs
The American Internal Revenue Service [IRS] announced major changes in its offshore voluntary compliance programs last month, which it said was to provide new options and avenues for U.S. taxpayers to come into compliance with their U.S. tax obligations.
The IRS said the changes include an expansion of the streamlined filing compliance procedures announced in 2012 and important modifications to the 2012 Offshore Voluntary Disclosure Program [OVDP]. The expanded streamlined procedures are intended for U.S. taxpayers whose failure to disclose their offshore assets was non-willful.
“This opens a new pathway for people with offshore assets to come into tax compliance,” said IRS Commissioner John Koskinen. “The new versions of our offshore programs reflect a carefully balanced approach to ensure everyone pays their fair share of taxes owed.
“Through the changes we are announcing today, we provide additional flexibility in key respects while maintaining the central components of our voluntary programs.”
A statement from the IRS added, “The IRS, working closely with the U.S. Department of Justice, continues to investigate foreign financial institutions that may have assisted U.S. taxpayers in avoiding their tax filing and payment obligations.
“In addition, on July 1, the new information reporting regime resulting from the Foreign Account Tax Compliance Act [FATCA] will go into effect. Thousands of foreign financial institutions will begin to report to the IRS the foreign accounts held by U.S. persons.
“The current Offshore Voluntary Disclosure Program was launched in 2012 and is the successor to prior voluntary programs offered in 2011 and 2009. Since the launch of the first program, more than 45,000 taxpayers have come into compliance voluntarily, paying about $6.5 billion in taxes, interest and penalties.”
The changes were welcomed by the American Citizens Abroad [ACA] group, who said [PDF] they demonstrate that the IRS has listened to ACA, the National Taxpayer Advocate, and tax professionals, “who have highlighted the dire need for a specific IRS program to allow Americans and green card holders resident abroad to enter into tax compliance.”
“What this clearly indicates is that the IRS acknowledges that the great majority of Americans living overseas are not criminal tax evaders but individuals who were non-compliant due to simple errors, omissions, or because they were not aware they needed to file income tax returns,” said Marylouise Serrato, Executive Director of ACA.
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