According to the BNA the IRS will soon announce several changes to the streamlined version of the Offshore Voluntary Disclosure Program, but won't change the policies behind eligibility for the program, two agency officials said September 20, 2014.
Hopefully the new guidance will provide clarification on what "Non-Willful" really means. We posted on September 18, 2014, So What Does "Non-Willful" Really Mean Under The Streamlined OVDP? , where we discussed that it appears that whatever Non-Willful means outside of the OVDP streamline program; it is certainly being applied differently in evaluating a Taxpayer’s ability to transition from the OVDP program into this new 2014 streamline program.
For domestic participants the IRS will consider only the taxpayer's personal financial interests in determining eligibility, not accounts for which taxpayers only have signature authority.
The agency will make it clear that domestic participants will have to include, in the penalty base, foreign assets that they may have already reported on a Form 5471 or a Form 3520.
These comments were made at the fall meeting of the American Bar Association in Denver by Jennifer Best, senior adviser to the deputy commissioner of the Large Business & International Division & John McDougal, special trial attorney for the Small Business/Self-Employed Division.
This sentiment about the difficulty of determining what "Non-Willful" means in the new OVDP streamline program is reiterated in an article in Bloomberg BNA's "Daily Tax Report" which discussed the expanded streamlined version of the IRS' Offshore Voluntary Disclosure Program (OVDP) and noted that many practitioners have said it's difficult for their clients to qualify for the program.
According to Jim Mastracchio, he has clients who have entered and will be entering the streamlined OVDP, but he too said non-willfulness "is not an easy standard to meet" and
- You have to work with the client and really understand their facts and circumstances.
- They have no criminal protection.
- It's a very serious review that you have to undertake,
- The client has to understand the ramifications of not being truthful, and
- The process the IRS is using to consider applications for the streamlined program isn't clear, and that too could carry risks.
With regard to applications to transition from the formal previous OVDP to the streamlined version, "It's pretty much a black box," he said, adding that it appears it isn't possible to appeal a rejection. "It's a bit of a mystery and I don't think it's very transparent."
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