The US Internal Revenue Service (IRS) has announced major changes in its offshore voluntary compliance programs, providing new options to help both taxpayers residing overseas and those residing in the US.
The changes include an expansion of the streamlined filing compliance procedures announced in 2012 and important modifications to the 2012 Offshore Voluntary Disclosure Program (OVDP).
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The expanded streamlined procedures are intended for US taxpayers whose failure to disclose their offshore assets was non-willful.
The original streamlined procedures announced in 2012 were available only to non-resident, non-filers.
The expanded streamlined procedures are available to a wider population of US taxpayers living outside the country and, for the first time, to certain U.S. taxpayers residing in the US States. The changes include:
- Eliminating a requirement that the taxpayer have $1,500 or less of unpaid tax per year;
- Eliminating the required risk questionnaire;
- Requiring the taxpayer to certify that previous failures to comply were due to non-willful conduct.
For eligible US taxpayers residing outside the US, all penalties will be waived. For eligible US taxpayers residing in the US, the only penalty will be a miscellaneous offshore penalty equal to 5% of the foreign financial assets that gave rise to the tax compliance issue.
IRS Commissioner John Koskinen said: "The new versions of our offshore programs reflect a carefully balanced approach to ensure everyone pays their fair share of taxes owed.
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By GlobalData"Through the changes we are announcing today, we provide additional flexibility in key respects while maintaining the central components of our voluntary programs," Koskinen added.
Since the program was launched, more than 45,000 taxpayers have come into compliance voluntarily, paying about US$6.5 billion in taxes, interest and penalties.
