Scott Michel Comments on Questions Surrounding Standards of Willful Conduct Under Streamlined Version of OVDP
09.18.2014
Daily Tax Report
The Daily Tax Report quoted Scott D. Michel regarding questions raised on the streamlined version of OVDP. Key areas of uncertainty included, how far back the IRS will look to assess willfulness and which version of the program will be offered to taxpayers living in the U.S. For the complete article, please click on the link above to view a PDF.
Excerpt taken from the article.
Questions Raised
Some practitioners said although it is still relatively early in the process, there are numerous questions about how the program operates and more guidance is needed.
Scott D. Michel, a member of Caplin & Drysdale LLP in Washington, said some questions relate to the version of the streamlined program offered to taxpayers living in the U.S.
One is whether a 5 percent penalty would be available in cases where taxpayers only had signature authority over a foreign account, Michel told Bloomberg BNA.
He said taxpayers also want to know whether the domestic version of the program is available for those who didn't file tax returns at all for their foreign accounts. Right now, he said, it appears it may only apply to those who want to file amended returns.
Another key area of uncertainty, he said, is how far back the IRS will look to assess willfulness. The streamlined program calls for taxpayers to submit three years of delinquent returns and six years of delinquent FBARs, or Reports of Foreign Bank and Financial Accounts, also known as the Financial Crimes Enforcement Network (FinCEN) 114.
In considering willfulness, Michel said, it isn't clear whether the government would look three years back, six years back, or to the start of the account. Another question is how the IRS will handle situations where a parent was willful and their son or daughter is now dealing with the account.
"We're struggling with these questions," Michel said.
The Caplin practitioner said in the bigger picture, many taxpayers are in a difficult position because they have accounts in Swiss banks that are preparing to hand over a huge amount of information to the IRS under a program that allows the banks to escape prosecution if they pay hefty fines and disclose their U.S.-owned accounts.
"These taxpayers would like to be able to signal to the IRS, in a way that would protect them from disclosure by a bank, that they're entering the OVDP," Michel said.
Excerpt taken from the article.
Questions Raised
Some practitioners said although it is still relatively early in the process, there are numerous questions about how the program operates and more guidance is needed.
Scott D. Michel, a member of Caplin & Drysdale LLP in Washington, said some questions relate to the version of the streamlined program offered to taxpayers living in the U.S.
One is whether a 5 percent penalty would be available in cases where taxpayers only had signature authority over a foreign account, Michel told Bloomberg BNA.
He said taxpayers also want to know whether the domestic version of the program is available for those who didn't file tax returns at all for their foreign accounts. Right now, he said, it appears it may only apply to those who want to file amended returns.
Another key area of uncertainty, he said, is how far back the IRS will look to assess willfulness. The streamlined program calls for taxpayers to submit three years of delinquent returns and six years of delinquent FBARs, or Reports of Foreign Bank and Financial Accounts, also known as the Financial Crimes Enforcement Network (FinCEN) 114.
In considering willfulness, Michel said, it isn't clear whether the government would look three years back, six years back, or to the start of the account. Another question is how the IRS will handle situations where a parent was willful and their son or daughter is now dealing with the account.
"We're struggling with these questions," Michel said.
The Caplin practitioner said in the bigger picture, many taxpayers are in a difficult position because they have accounts in Swiss banks that are preparing to hand over a huge amount of information to the IRS under a program that allows the banks to escape prosecution if they pay hefty fines and disclose their U.S.-owned accounts.
"These taxpayers would like to be able to signal to the IRS, in a way that would protect them from disclosure by a bank, that they're entering the OVDP," Michel said.
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