Tax Notes Today has an article summarizing some discussion by an IRS representative and practitioners at the October 30 at the University of San Diego School of Law-Procopio International Tax Law Institute annual conference. Amanda Athanasiou,
IRS Addresses Questions About OVDP and Streamlined Filing, 2014 TNT 212-7 (11/3/14) [no link available]. I offer only one short excerpt that I found particularly interesting and might be interesting to many readers of this blog.
Addressing the concern that the IRS may not accept non-willful certification for taxpayers transitioning from the OVDP to the streamlined program, Price [Daniel Price, supervisory attorney with IRS Chief Counsel] said the Service is concurring with non-willful certification in most of those cases. In the case of assertions that are clearly deficient, Price said the IRS is giving taxpayers another chance by requesting additional information. "We're giving taxpayers and their reps an opportunity for a do-over, but we do expect actual statements of facts," he said.
Martin R. Press of Gunster, Yoakley & Stewart PA [attorney for Zwerner in the much publicized FBAR penalty case] noted that only U.S. willfulness counts for purposes of the streamlined program. For the most part, he said, what someone does overseas is not a factor, even if a foreign account is willfully unreported in the foreign country of residence.
"The IRS is taking that seriously for purposes of the streamlined program," Price confirmed.
However, the IRS has left itself some wiggle room, Press noted. For example, deliberate evasion of foreign residence country income tax is a negative factor.
I thought the comment that most taxpayers certification of nonwillfulness is being accepted and that the IRS is giving taxpayers some opportunity to supplement the information to justify nonwillfulness. It is not clear to me where the participants ended up on the willful violation of foreign tax law issue. Perhaps some reader who attended the session could offer their recollection / impression of where that discussion ended up.
Hi Jack,
ReplyDeleteOne reason Messrs Price and Press addressed the issue of "violation of foreign country's law" could have been because of an observation that the old OVDI 5% penalty required, inter alia, that the taxpayer be current with tax and filing obligations in his country of residence.
If the day-count requirement in the new Offshore Streamlined program is designed to filter out "bad actors" it seems that a certification as to being tax compliant in the country of residence is a better way to do that.
I believe the conclusion on the shift away from non-US tax compliance was that it's not directly relevant under US law.
In a subsequent session entitled "OVDI Civil FBAR Penalties after Zwerner" Messrs Press, Toscher, and Martin addressed the willfulness standard at length.
Recall Mr. Press litigated Zwerner.. and even included the jury instructions on a slide... information not available in the PACER and fascinating to dissect.
The conference was one of the best I've attended and I highly recommend to those whose practice involves international tax matters.