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This alert concerns taxpayers with undisclosed foreign financial accounts and undisclosed foreign assets, as well as taxpayers participating in the Internal Revenue Service's Offshore Voluntary Disclosure Program (OVDP) or Streamlined Filing Compliance Procedures (Streamlined).
On June 18, the IRS introduced significant changes to both OVDP and Streamlined. These changes again increase the volume and breadth of information requested by the IRS within OVDP and increase the penalties payable under OVDP in certain cases. The changes also, however, broaden the availability of Streamlined, especially for U.S.-resident taxpayers, and permit those already in OVDP who qualify for Streamlined to apply the Streamlined penalty to their OVDP matters instead of incurring the OVDP penalty in certain cases.
Changes to the Programs
Many taxpayers and practitioners believed that the OVDP 27.5 percent penalty on the total value of undisclosed foreign assets was too expensive for U.S.-resident taxpayers whose failures to disclose offshore accounts or assets were not due to willful tax avoidance. To address this and other issues, the IRS has expanded the availability of the Streamlined program, including for the first time making it available to U.S.-resident taxpayers, albeit with a small penalty.
Streamlined Changes
OVDP Changes
Applying the Streamlined Penalty Instead of the OVDP Penalty in Certain OVDP Cases
Since the changes to Streamlined have opened that program to U.S.-resident taxpayers, the IRS has made it possible for taxpayers already in OVDP to pay the Streamlined penalty instead of the OVDP penalty if their conduct was non-willful. To take advantage of this penalty reduction, the taxpayer must have submitted the Offshore Voluntary Disclosure Letter by July 1. (A taxpayer who has not done so may still opt out of OVDP and simply apply for Streamlined.)
The taxpayer must still complete and file all documents required by OVDP and pay all tax, penalties, and interest required by OVDP, except for the 27.5 percent OVDP penalty, by the applicable OVDP deadline. The taxpayer must also sign a more detailed version of the Streamlined non-willfulness certification under penalty of perjury. If the certification is accepted, the taxpayer will have to pay the 5 percent Streamlined penalty in lieu of the 27.5 percent OVDP penalty.
Individual Clients Department Partner Dina Kapur Sanna Co-Chaired the 17th International Estate Planning Institute sponsored by STEP-NY and the New York State Bar Association Trusts & Estates Law Section, the International Section on March 31 and April 1 where Individual Clients Department Partner Carl Merino also spoke.
On March 12, Dina Kapur Sanna, an International Trusts and Estates Partner at Day Pitney, was a speaker at the American College of Trust and Estate Counsel (ACTEC) 2022 Annual Meeting in San Diego, CA, where she presented "Tricks and Tips on Navigating the Choppy Waters of International Estate/Succession Planning.
Individual Clients Attorneys Carl A. Merino, Dina Kapur Sanna and Sarah B. Jacobson co-authored an article for Trusts & Estates Magazine titled, "Pre-Residency Planning for Your Client's Trust."
New York Partner Dina Kapur Sanna presented on international estate planning at the Florida Fellow Institute, hosted by the American College of Trust and Estate Counsel (ACTEC) on September 23.
Partner Dina Kapur Sanna spoke at the Private Client TransTrusts Bermuda event on a panel titled, “Impact of regulation, Economic Substance, Beneficial Owner Registers, FATCA, CRS across jurisdictions,” on June 4.
Miami Partners Sarah B. Jacobson and Georgia A. Thompson's promotion to partnership were featured in Florida Bar News' On The Move Column.
Miami Partners Sarah B. Jacobson and Georgia A. Thompson's promotions to partnership were featured in the Sun Sentinel's People on the Move column.
Day Pitney LLP promoted 11 attorneys to partner in the firm's three core departments: Corporate and Business Law, Litigation, and Individual Clients.
New York Partner Dina Kapur Sanna from our firm's Individual Clients department has been recognized on Citywealth's Top 100 Private Lawyers 2021 List.
Day Pitney Press Release
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