Scott Michel Comments on TIGTA Recent Report Criticizing OVDP

Tax Notes spoke with Scott D. Michel concerning the Treasury Inspector General for Tax Administration (TIGTA) comments in a recent report on the IRS's offshore voluntary disclosure program. For the complete article, please visit Tax Notes' website (subscription required).  

Excerpt taken from the article "TIGTA Faults IRS Efforts on OVDP Compliance, Processing" authored by  Andrew Velarde and Nathan J. Richman.

Scott D. Michel of Caplin & Drysdale Chtd. said that the TIGTA review had a broad objective and that the issues found by TIGTA were fairly limited. "While all of us practitioners have issues from time to time in particular cases, what TIGTA has said here is that in a very broad sense the program is operating as it should," he said, adding that with the exception of the isolated issues raised, "it's an implicit general endorsement of the program, which, I think, speaks well of the way the Service has been managing it."

. . .

"Look, the IRS has always said that the program is not permanent," Michel said. He added that while he has both heard rumors about the end of the OVDP and officials saying that the imminent end is not under consideration, "the day is going to come when that program is either terminated or changed in a fairly dramatic way."

Michel noted that the OVDP is just one part of the enforcement efforts by the IRS and the Justice Department Tax Division. "I imagine that the question whether to continue the program would be directly related to the broader enforcement rubric, and I would hope that the decision-makers see that the program is a necessary and valuable component of tax compliance while the government is vigorously continuing to pursue banks, account holders, and third parties involved with unreported offshore assets, and is also continuing to pursue other avenues, such as [the Foreign Account Tax Compliance Act] and other methods of information exchange," he said.

. . .

Michel said that TIGTA's conclusions that taxpayers who withdraw from the OVDP generally do not hear back from the IRS reflects his impression of what practitioners have been seeing. "Having said that, people withdraw for all kinds of reasons [and] there shouldn't be an inference that people who withdraw from the program are somehow trying to get away with something," he added. In many cases, there are valid reasons for not moving forward with an offshore voluntary disclosure, he said.