On June 26, 2012, the Internal Revenue Service (“IRS”) released new FAQ’s on the current Offshore Voluntary Disclosure Program (“OVDP”) . The IRS opened the current OVDP on January 9, 2012, but, other than announcing the new FBAR penalty of 27.5%, had not issued updated guidance, leaving practitioners and taxpayers to rely on the 2011 program FAQ’s and a January 2012 news release for details on the program.
Unlike the 2009 and 2011 programs, the current program does not specify a range of years for the disclosure period. Instead, the disclosure period is “the most recent eight tax years for which the due date has already passed” and does not include “current years for which there has not yet been non-compliance.”
Another new feature of the current OVDP is that it has no set end date. The IRS has reserved the option to change the terms of the program, undoubtedly to make them less favorable, or to end it entirely at any time.
The new FAQs are available here: new%20FAQs.pdf
The IRS also announced that it will provide special procedures for US citizens living abroad who failed to file US income tax returns and FBARs but have little to no U.S. tax liability. This special procedure will be available September 1. Details have not been provided.
The IRS also increased its estimate of the amount of money it has recovered through the three iterations of the program to $5 billion.