IRS Closes Offshore Loophole

The IRS closed a loophole Tuesday that has been used by some taxpayers with offshore accounts. Under existing law, if a taxpayer challenges in a foreign court the disclosure of tax information by that government, the taxpayer is required to notify the U.S. Justice Department of the appeal. The IRS said that if the taxpayer fails to comply with this law and does not notify the U.S. Justice Department of the foreign appeal, the taxpayer will no longer be eligible for the Offshore Voluntary Disclosure Program (OVDP). The IRS also put taxpayers on notice that their eligibility for the OVDP could be terminated once the U.S. government has taken action in connection with their specific financial institution.

The voluntary disclosure programs are part of a wider effort by the IRS to stop offshore tax evasion, help bring people back into the tax system and ensure tax compliance. This includes beefed up enforcement, criminal prosecution and implementation of third-party reporting through the Foreign Account Tax Compliance Act, also known as FATCA.

The IRS reopened the 2012 OVDP following continued strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs. This program will remain open for an indefinite period until otherwise announced. 

Source: Pettir.com on article “IRS Closes Offshore Loophole & Announces New Details on OVDP”