New LB&I Campaign for Post OVDP Compliance (11/25/19)

I previously reported that IRS LB&I included among its “campaigns” OVDP Declines-Withdrawals Campaign.  IRS LB&I "Campaigns" to Focus on OVDP Declines-Withdrawals, Among Other Issues (Federal Tax Crimes Blog 2/1/17), here.

LB&I’s campaigns are an audit strategy added in 2017 to improve return selection, identify issues representing a risk of noncompliance, and make the greatest use of its limited resources.

In another OVDP related development, in November 2019), the IRS added the following:

Post Offshore Voluntary Disclosure Program (OVDP) Compliance

Practice Area: Withholding & International Individual Compliance 

Lead Executive: John Cardone, director of Withholding & International Individual Compliance 

U.S. persons are subject to tax on worldwide income. This campaign addresses tax noncompliance related to former Offshore Voluntary Disclosure Program (OVDP) taxpayers’ failure to remain compliant with their foreign income and asset reporting requirements. The IRS will address tax noncompliance through soft letters and examinations.

See IRS website for its active campaigns, here.

JAT Comment:  One of the traditional goals of the IRS's voluntary disclosure programs is not only to resolve past issues but, put the taxpayers involved on a track of ongoing compliance, not only with respect to offshore accounts but their tax obligations generally.  It is not clear whether these initiatives will focus narrowly on the compliance issue identify but might sweep more broadly to identify general noncompliance.

New IRS LB&I Compliance Campaigns of Interest (7/30/19)

IRS LB&I has announced six new compliance campaigns, here.

1.  The new campaign particularly relevant for readers of this blog is:

• Post OVDP Compliance
Practice Area: Withholding & International Individual Compliance
Lead Executive: John Cardone, director of Withholding & International Individual Compliance

U.S. persons are subject to tax on worldwide income. This campaign addresses tax noncompliance related to former Offshore Voluntary Disclosure Program (OVDP) taxpayers’ failure to remain compliant with their foreign income and asset reporting requirements. The IRS will address tax noncompliance through soft letters and examinations.

JAT Comment:  Readers will recall that the OVDP had several iterations and, with the expansion of the Streamlined alternatives for nonwillful actors, OVDP itself was targeted to willful actors or persons at risk of the IRS treating them as willful actors.  So, those persons who took advantage of OVDP and took care of past issues presumably were back in the system with respect to their foreign income and asset reporting.  But, presumably, the IRS has some reason to believe that those OVDP participants may not  have stayed in compliance after closing out their OVDP participations.

2.  Another campaign of possible interest to readers is:

• ExpatriationPractice Area: Withholding & International Individual Compliance
Lead Executive: John Cardone, director of Withholding & International Individual Compliance 

U.S. citizens and long-term residents (lawful permanent residents in eight out of the last 15 taxable years) who expatriated on or after June 17, 2008, may not have met their filing requirements or tax obligations. The Internal Revenue Service will address noncompliance through a variety of treatment streams, including outreach, soft letters, and examination.

New LB&I Compliance Campaigns Related to Offshore Matters (11/11/18)

The IRS has announced that new "compliance campaigns" related to offshore matters.  See IRS web page titled "IRS Announces the Identification and Selection of Five Large Business and International Compliance Campaigns," here.  The IRS describes its compliance campaigns as:

LB&I is moving toward issue-based examinations and a compliance campaign process in which the organization decides which compliance issues that present risk require a response in the form of one or multiple treatment streams to achieve compliance objectives. This approach makes use of IRS knowledge and deploys the right resources to address those issues. 

The campaigns are the culmination of an extensive effort to redefine large business compliance work and build a supportive infrastructure inside LB&I. Campaign development requires strategic planning and deployment of resources, training and tools, metrics and feedback. LB&I is investing the time and resources necessary to build well-run and well-planned compliance campaigns.

The new offshore related campaigns are:

• Offshore Service Providers

Practice Area: Withholding & International Individual Compliance
Lead Executive: John Cardone, director of Withholding & International Individual Compliance
The focus of this campaign is to address U.S. taxpayers who engaged Offshore Service Providers that facilitated the creation of foreign entities and tiered structures to conceal the beneficial ownership of foreign financial accounts and assets, generally, for the purpose of tax avoidance or evasion. The treatment stream for this campaign will be issue-based examinations.

• FATCA filing accuracy.  

FATCA Filing Accuracy
Practice Area: Withholding & International Individual Compliance
Lead Executive: John Cardone, director of Withholding & International Individual Compliance
The Foreign Account Tax Compliance Act (FATCA) was enacted in 2010 as part of the HIRE Act. The overall purpose is to detect, deter and discourage offshore tax abuses through increased transparency, enhanced reporting and strong sanctions. Foreign Financial Institutions and certain Non-Financial Foreign Entities are generally required to report the foreign assets held by their U.S. account holders and substantial U.S. owners under the FATCA. This campaign addresses those entities that have FATCA reporting obligations but do not meet all their compliance responsibilities. The Service will address noncompliance through a variety of treatment streams, including termination of the FATCA status.

• 1120-F Delinquent Returns Campaign

Practice Area: Cross Border Activities
Lead Executive: Orrin Byrd, director of Field Operations (East)
The objective of the Delinquent Returns Campaign is to encourage foreign entities to timely file Form 1120-F returns and address the compliance risk for delinquent 1120-F returns. This is accomplished by field examinations of compliance risk delinquent returns and external education outreach programs. The campaign addresses delinquent-filed returns, Form 1120-F U.S. Income Tax Return of a Foreign Corporation.
Form 1120-F must be filed on a timely basis and in a true and accurate manner for a foreign corporation to claim deductions and credits against its effectively connected income. For these purposes, Form 1120-F is generally considered to be timely filed if it is filed no later than 18 months after the due date of the current year's return. The filing deadline may be waived, in situations based on the facts and circumstances, where the foreign corporation establishes to the satisfaction of the commissioner that the foreign corporation acted reasonably and in good faith in failing to file Form 1120-F per Treas. Reg. Section 1.882-4(a)(3)(ii). LB&I Industry Guidance 04-0118-007 dated 2/1/2018 established procedures to ensure waiver requests are applied in a fair, consistent and timely manner under the regulations.

The full list of compliance campaigns is here.  The ones that might be of particular interest to readers of this blog are:

IRS LB&I "Campaigns" to Focus on OVDP Declines-Withdrawals, Among Other Issues (2/1/17)

The IRS has announced that LB&I "is taking a new approach to tax compliance, with a series of 13 campaigns aimed at cracking down on tax evasion."  Michael Cohn, IRS rolls out new compliance campaigns for large businesses and international taxpayers (AccountingToday 1/31/17), here.  The campaigns are directed to several issues of tax compliance that the IRS will focus on.  The article lists them all, but the one particularly relevant to the subjects previously covered on Federal Tax Crimes Blog is:

• OVDP Declines-Withdrawals Campaign 

The Offshore Voluntary Disclosure Program allows U.S. taxpayers to voluntarily resolve past non-compliance related to unreported offshore income and failure to file foreign information returns. The campaign addresses OVDP applicants who applied for pre-clearance into the program but were either denied access to OVDP or withdrew from the program of their own accord. The IRS will address continued noncompliance through a variety of treatment streams including examination.

The article has the other categories, so interested readers should go there.

The article notes in concluding:

These campaigns represent the first wave of LB&I's issue-based compliance work. The IRS said more campaigns will continue to be identified, approved and launched in the coming months. 

JAT Comment:  I am not sure what this adds to the current process.  I had only two OVDP submissions that were  not completed -- one denied and one withdrawn.  Both were audited with good results -- in the denied case, ended up with same result as OVDP (which is what we wanted in the first place) and the other got a great result (which we anticipated in withdrawing).  So my limited anecdotal experience is that the IRS was attending to this category anyway.  But, perhaps the IRS had fallen behind or some were slipping through the cracks.