In the April 22nd edition of Tax Notes, it was reported that the number of taxpayers who were previously accepted in the IRS’ 2012 Offshore Voluntary Disclosure Program and now were notified that they were ineligible was relatively small and that taxpayers “should not be afraid to enter the program”. A recent posting on this blog announced the Service’s initial notice that individuals and persons who were notified by disclosures made by certain banks to IRS demands for lists of account holders and depositors would not be eligible even if previously accepted into the program.
John Mc Dougal, special trial counsel and division counsel, IRS Small Business/Self-Employed Division stated during an ABA Tax Section webcast that media coverage of the policy position on disqualification was overblown and only “dozens” but not “hundreds” were affected. Although some U.S. taxpayers who had previously been accepted into the IRS’s offshore voluntary disclosure program (OVDP) have since been deemed ineligible, the numbers are small, and taxpayers should not be afraid to enter the program, government officials said April 10. Individuals who attempt to block disclosure under bank secrecy laws of the jurisdiction in which the account is located or were previously identified on disclosures made to the IRS from the foreign financial institutions are stated to be ineligible.
The Service and apparently the Department of Justice Tax Division, who also had a senior litigation counsel on the program, felt that it had to continue to endorse the merits of the program. It will be interesting to see if individuals who were “accepted” and subsequently “disqualified” and subject to prosecution will be able to quash a resulting information or indictment on notions of due process or agency estoppel. In such case the government would be expected to vigorously challenge such efforts.