According to Law360, Individuals who willfully failed to
report their offshore bank accounts shouldn't be "coy" about the
facts when they decide to participate in the Internal Revenue Service's voluntary disclosure practice, an agency official said on
November 12, 2020, noting that there are no do-overs.
Participants in the IRS' Criminal Investigation Voluntary Disclosure Practice should be as forthcoming as possible because "there are no do-overs with respect to this," according to Carolyn Schenck, the agency's national fraud counsel and assistant division counsel, international.
Individuals should be detailed
when filling out the narrative section of Form 14457, which is needed for
entering the disclosure program, she said during a webinar hosted by San
Diego-based law firm Procopio Cory Hargreaves & Savitch LLP.
"I think the takeaway with respect to voluntary disclosure is: You and your client have already decided to come through the front door, so this isn't really the time to be coy," Schenck said. "Lay out all your facts and trust the process."
The IRS to its long-standing voluntary disclosure practice in November 2018 following of the agency's Offshore Voluntary Disclosure Program. First offered in 2009, the OVDP had allowed those who willfully failed to file foreign bank and financial account, or FBAR, forms to get lower penalties and protection from criminal liability if they came forward.
Under the voluntary disclosure practice, participants face and a 50% FBAR penalty. Specialists have noted that although the disclosure practice as the OVDP, it still offers a way to avoid criminal referral.
Those who didn't willfully fail to report their offshore accounts have the option of the IRS' streamlined filing procedures, which involve a relatively low 5% FBAR penalty. Individuals seeking to participate in this disclosure process must certify that their conduct was nonwillful due to "negligence, inadvertence or mistake," according to the IRS.
Schenck said the IRS is looking at cases that entered the streamlined procedures to determine whether they actually qualify.
The Agency Has Had Cases That Went Into The Regular Audit Stream "Because The IRS Has Made The Determination That This Is, In Fact, A Willful Situation," She Said.
Practitioners should be aware that the recklessness standard is fluid,
"and it's getting a little easier to prove with each circuit court that
cites the Third Circuit as that standard for recklessness," Smeltzer said.