Page 1 - Offshore account holders should beware: The IRS is still coming

The Tax Adviser

Offshore account holders should beware: The IRS is still
coming

The recent end of the OVDP is not the end of IRS enforcement of undisclosed offshore accounts.
By Christopher M. Ferguson, J.D.
October 25, 2018

For most of the past decade, the IRS has maintained a safe harbor for taxpayers who want to disclose
offshore account holdings that may otherwise expose them to criminal penalties, and over the years, tens of
thousands of taxpayers have availed themselves of the program. But on Sept. 28, the world changed for
those who have not yet revealed their foreign accounts to law enforcement.

Citing waning taxpayer participation, the IRS ended (https://www.irs.gov/newsroom/irs-to-end-offshore-
voluntary-disclosure-program-taxpayers-with-undisclosed-foreign-assets-urged-to-come-forward-now) the
Offshore Voluntary Disclosure Program (OVDP) at the end of September. Yet taxpayers would be wrong if
they think the program's closure will dampen the agency's resolve to go after those it believes are hiding
taxable income overseas.

In fact, the IRS last year bragged about its enhanced digital tools for sniffing out those it believes are skirting
tax laws (see Cohn, "IRS Criminal Investigation Chief Plans New Enforcement Programs," Accounting Today
(Aug. 2, 2017), and the Department of Justice's Tax Division boasts a 91.5% conviction rate for tax crimes
(IRS, Criminal Investigation 2017 Annual Report
(https://www.irs.gov/pub/foia/ig/ci/2017_criminal_investigation_annual%20report.pdf), p.7). Since 2009, more
than 1,500 people have been indicted for crimes related to international activities, according to the IRS (IR-
2018-52 (https://www.irs.gov/newsroom/irs-to-end-offshore-voluntary-disclosure-program-taxpayers-with-
undisclosed-foreign-assets-urged-to-come-forward-now) (3/13/18)).

The benefit of the OVDP was that, even though participating taxpayers had to pay fines, those fines were
reduced and the threat of criminal prosecution was largely taken off the table (as long as taxpayers provided
a timely and complete disclosure of their assets and the years those assets were kept hidden).

Though time has run out for taxpayers to make a complete disclosure and avail themselves of those
program benefits, they can still voluntarily reveal their offshore assets.