IRS Commissioner's Remarks at Conference Hint at OVDP Changes

Speaking at an International Tax conference recently, the commissioner of the Internal Revenue Service implied that changes might be in the works for the agency's offshore voluntary disclosure program (OVDP). The changes, if created, would be an important breakthrough for certain expats, who have been living (and banking) overseas for years, or even decades, since the changes potentially would allow them to come into compliance without facing the same sort of punitive penalties imposed on US citizens whose non-compliance was willful.

At the conference, Commissioner John Koskinen touted the success of the 2012 OVDP and the previous OVDPs before it. The OVDPs have yielded more than $6 billion in taxes, interest, and penalties from 43,000 voluntary disclosures. The IRS has received considerable negative feedback, however, on one element of the disclosure program: its uniform approach to penalizing taxpayers, regardless of whether their noncompliance was willful or not.

Now the agency is considering whether a change in focus and penalty structures might improve the OVDP. The IRS is assessing whether prior OVDPs failed to take into adequate consideration US citizens, mostly Americans living abroad, who were not compliant but whose noncompliance was not willful.