• A 50% offshore penalty applies if either a foreign financial institution at which the taxpayer has or had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement has been publicly identified as being under investigation or as cooperating with a government investigation. See FAQ 7.2.
• FAQ 7 has been modified to require that the offshore penalty be paid in full at the time of the OVDP submission.
June 20, 2014
IRS NEW 6/18/14 STREAMLINED DISCLOSURE PROGRAM - DETAILS AND PROCEDURES
The information on the program changes are:
The new procedures are as follows:
1. Foreign residents (requiring only foreign residence in the 3 year period): File 3 years of delinquent or amended returns and pay tax and interest. No penalties (including FBAR or miscellaneous) will be assessed. Must also complete and sign a statement on the Certification by U.S. Person Residing Outside of the U.S. certifying (i) eligibility for the procedure, (ii) filing of all required FBARs, and (iii) that the failure to file tax returns, report all income, pay all tax, and submit all required information returns, including FBARs, resulted from non-willful conduct.
2. Nonforeign residents (Domestic residents): Must file 3 years of returns and pay tax and interest. No penalties other than a 5% miscellaneous penalty on foreign financial accounts only will be assessed. Must complete and Sign the Certification by U.S. Person Residing in the U.S. that (i) eligibility is met; (ii) all FBARs have been filed; (iii) "the failure to report all income, pay all tax, and submit all required information returns, including FBARs, resulted from non-willful conduct;" and (iv) that the miscellaneous penalty amount is accurate.
Nonwillful conduct for the purposes of #1 and #2 is: "conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law;
The taxpayers can be audited under the income tax audit guidelines but will not be automatically audited.
A couple of the material changes to OVDP 2012 are described in par. 1.1 of the FAQs as follows: