The OVDI Process – Part Two

The OVDI Process - After Preclearance is received

If a taxpayer makes all the requisite disclosures and receives the preclearance then they must make their disclosure. Note these guidelines are subject to change. Consult the IRS’s website for the most recent OVDI procedures. [1] Under the IRS’s guidelines:

Taxpayers or their representatives should mail their “Offshore Voluntary Disclosure Letter”[2] and “attachment”[3] to the following address:

Internal Revenue Service
Voluntary Disclosure Coordinator
1-D04-100
2970 Market Street
Philadelphia, PA 19104

OVDI Criminal Investigation will review the Offshore Voluntary Disclosure Letter and notify taxpayers or representatives by mail or facsimile whether their offshore voluntary disclosures have been preliminarily accepted as timely or declined. Criminal Investigation intends to complete its work within 45 days of receipt of a complete Offshore Voluntary Disclosure Letter.

Once a taxpayer’s disclosure has been preliminarily accepted by CI as timely, the taxpayer must complete the submission and cooperate with the civil examiner in the resolution of the civil liability before the disclosure is considered complete.

The OVDI Process - After Preliminary Acceptance into the program

Assuming there is preliminary acceptance into ODVI, a letter will be received from the Criminal Investigative unit. The letter will instruct the taxpayer or his representative to submit the full voluntary disclosure submission to the Austin Campus within 90 days of the date of the timeliness determination. The taxpayer must provide the following:

• Copies of original returns (and amendments) filed for the years covered by the voluntary disclosure.
• Amended returns and certain tax return schedules for the years covered by the voluntary disclosure.
• A signed offshore voluntary disclosure letter with the necessary attachment.
• A check for the tax, interest, and penalty computed on the account.
• A completed foreign account or asset statement if the information on the statement was not already disclosed on the offshore voluntary disclosure letter.
• Completed penalty computation worksheet.
• Signed extension of time to assess tax (including penalties and FBAR penalties).
• Completed FBARs.
• For applicants disclosing offshore financial accounts with an aggregate highest account balance in any year of $500,000 or more, financial account statements showing all account activity during the voluntary disclosure period. For applicants disclosing offshore financial accounts with an aggregate highest account balance in any year of less than $500,000, copies of offshore financial account statements reflecting all account activity for each of the tax years covered by the voluntary disclosure must be available upon request.

You may also be contacted by an OVDI examiner for specific additional information to process your voluntary disclosure. The examiner will certify that your voluntary disclosure is correct, accurate, and complete by reviewing your records along with your amended or delinquent income tax returns. The examiner will also verify the tax, interest, and civil penalties you owe.

A complete submission is required for acceptance into the OVDI program. Taxpayers may submit voluminous documents not requiring original taxpayer signatures (e.g., bank statements, entity organization documents, etc.) on a compact disc (CD) or a USB removable storage device (flash drive). Normally, other than an examination for completeness, no examination will be conducted with respect to the disclosure; however, the IRS does reserve this right. The OVDI operates on a first come, first serve basis. If you are seriously contemplating entering into this program, you should begin to have the amended tax returns prepared and gather the necessary documents at the time you file for preclearance.

Do you have more questions about the OVDI process? Please call our office for further assistance.

[1]https://www.irs.gov/uac/2012-Offshore-Voluntary-Disclosure-Program

[2]https://www.irs.gov/pub/irs-utl/OVDIntakeLtr.pdf

[3]https://www.irs.gov/pub/irs-utl/OVDIntakeLtrAttach.pdf