IRS LB&I Announces Post OVDP Compliance Campaign, Signaling Danger for International Taxpayers

Facing Sales Tax Fraud Penalties in California? You Could Also Be Facing Criminal Charges
November 25, 2019
Louisiana Man Convicted on Fraud Charges After Investigation by IRS and Postal Service
November 27, 2019

IRS LB&I Announces Post OVDP Compliance Campaign, Signaling Danger for International Taxpayers

The IRS Large Business and International Division, better known as “LB&I,” is the branch of the IRS focused on taxpayers with significant assets, such as partnerships and corporations whose assets exceed $10 million. Unsurprisingly, these taxpayers often face exceptionally complex tax compliance issues – and in turn, exceptionally complex tax audits. To address these issues in an organized and efficient manner, LB&I has launched an assortment of targeted “compliance campaigns,” which we reported on in 2018 with a follow-up this July. Over the past several years, these campaigns have taken aim at a wide range of targets, from FATCA filing accuracy and high-income non-filers to micro-captive insurance and individual foreign tax credits. As the Federal Tax Crimes blog recently noted, in November of 2019 IRS LB&I quietly added a new campaign to its list, potentially impacting hundreds if not thousands of international taxpayers. Our international tax attorneys discuss the new campaign below, and offer guidance for taxpayers who may be affected.

 

IRS LB&I Adds Post Offshore Voluntary Disclosure Program (OVDP) Compliance Campaign to List of Active Campaigns

IRS LB&I has launched numerous compliance campaigns since 2017, many of which are focused specifically on international tax issues. For instance, the Foreign Earned Income Exclusion Campaign targets taxpayers who improperly claimed the FEIE despite lacking eligibility. As noted above, LB&I has also launched a FATCA compliance campaign, which targets “entities that have FATCA reporting obligations but do not meet all their compliance responsibilities,” such as filing Form 8938 (Statement of Specified Foreign Financial Assets), under the Foreign Account Tax Compliance Act. Simultaneously, the Offshore Private Banking Campaign targets taxpayers who may not have complied with “income tax and information reporting requirements associated with… offshore activities.”

Considering these trends – and the IRS’ historically aggressive approach to offshore tax evasion – the latest compliance campaign should not come as a surprise. It does, however, demand strategic action by those potentially affected.

The new campaign, launched late this year, is known as the Post Offshore Voluntary Disclosure Program (OVDP) Compliance Campaign. The campaign, whose lead executive is John Cardone, Director of Withholding & International Individual Compliance, is described by LB&I as follows:

“U.S. persons are subject to tax on worldwide income. This campaign addresses tax noncompliance related to former Offshore Voluntary Disclosure Program (OVDP) taxpayers’ failure to remain compliant with their foreign income and asset reporting requirements. The IRS will address tax noncompliance through soft letters and examinations.”

In other words, the campaign may lead directly to more foreign account tax audits (referred to by LB&I as “examinations”). This could jeopardize certain taxpayers who previously participated in the OVDP, a now-defunct IRS program discontinued in 2018. Noncompliance, depending on whether resulting from negligence or willfulness, can lead to civil and/or criminal tax penalties, such as FBAR penalties or tax evasion penalties. This makes it essential to approach your matter carefully, under the guidance of a skilled international tax defense attorney.

 

See our 2011 OVDI Q and A Library

See our FBAR Compliance and Disclosure Q and A Library 

See our Foreign Audit Q and A Library

International FBAR + FATCA Tax Lawyers Providing Foreign Account Audit Defense Representation

The Tax Law Office of David W. Klasing is an award-winning California tax law firm specializing in complex, high-stakes international tax issues, ranging from FBAR audits and criminal tax defense to IRS appeals and civil tax litigation. With extensive experience (at times up to 80% of our book of business) representing U.S. expats, dual citizens, resident aliens, multinational entities, and other taxpayers with international tax and estate issues, we bring an unparalleled breadth and depth of knowledge to each case we handle.

If you have a tax question concerning any aspect of FATCA or FBAR compliance, or if you believe the new LB&I campaign may affect you or your business, we can help you prepare – and persevere. Our mission is to mitigate or avoid IRS penalties to the greatest extent possible, while helping you to engage in more effective tax planning in the future. Contact the Tax Law Office of David W. Klasing online to schedule a reduced-rate consultation today, or call 24 hours at (800) 681-1295.

In addition to our staffed main offices in Irvine,  the Tax Law Offices of David W. Klasing has unstaffed (conference room only) satellite offices in Los AngelesSan BernardinoSanta BarbaraPanorama CityOxnardSan DiegoBakersfieldSan JoseSan FranciscoOakland, Carlsbad and Sacramento.

 

Note: If you have concerns about the privacy of our initial or subsequent communication and are unable to easily travel to our Irvine / Orange County Main Office, consider scheduling a GoToMeeting to safely and securely establish an initial or maintain an existing attorney client relationship.  With end-to-end encryption, strong passwords and top-rated reliability, no one is messing with your meeting. To schedule a reduced rate initial consultation via GoToMeeting follow this link.   Call our office and request a GoToMeeting if you are an existing client. We are generally happy to travel to any of our appointment only satellite offices for a subsequent meeting in appropriate circumstances once a relationship is established via a signed engagement letter and the payment of an initial retainer or where enough retainer is available where a current client to cover the reasonable travel time and time required for the meeting.

Will it cost me more to hire the Tax Law Offices of David W. Klasing, who’s main office and the vast majority of the firm’s staff is located in Irvine California, but an appointment only Satellite office is close to my location, as opposed to a local company?  Absolutely not!  See our policies that address this issue here.