Tax Notes Quotes Scott Michel: IRS Auditors Take Closer Look at 'Quiet' Disclosures of Offshore Accounts

Scott D. Michel was quoted in Tax Notes concerning the IRS' increased examination activity involving taxpayers who did not disclose their offshore accounts through the offshore voluntary disclosure program (OVDP) but instead filed amended returns and foreign bank account reports for prior years outside of a formal IRS Program. For more on the story, please visit Tax Notes' website (subscription required).

Excerpt taken from the article "IRS Auditors Taking Closer Look at 'Quiet' Disclosures of Offshore Accounts" by Jaime Arora for Tax Notes

Speaking at the American Law Institute tax controversy conference in Washington, Scott D. Michel of Caplin & Drysdale said that the IRS has apparently improved its ability to detect these so-called non-program disclosures. In speaking with revenue agents, Michel said, it is clear that they are unhappy with taxpayers who engage in such practices, even if there may have been good cause to do so, and they show all signs of being aggressive in these examinations.

In April the Government Accountability Office released a report 2013 TNT 82-45: GAO Reports that lauded the success of the IRS's offshore voluntary disclosure programs but encouraged the agency to use the obtained information to identify taxpayers with unreported accounts who might be trying to stay under the radar. Michel said that the report may be one of the motivating factors for the uptick in exam activity. (Prior coverage 2013 TNT 82-1: News Stories.)

Practitioners ought to caution clients if they are considering making a non-program disclosure of an offshore account instead of going into the formal voluntary disclosure program, Michel said. "I think the odds of being detected are significantly higher now than they were two to three years ago," he said.