The 2014 OVDP is directed at those who wilfully failed to meet their US tax obligations or those with a higher risk of being charged with criminal conduct. This is the preferred IRS route for all voluntary disclosures that do not meet the streamlined criteria.
This program has a fixed penalty structure which is substantial, but in general has a significant reduction in the level of penalties that would be applied in cases where a taxpayer wilfully failed to file tax returns or disclose sources of income. Taxpayers with accounts at named institutions are likely to have an increased penalty of 50%.
Under the OVDP both delinquent and amended tax returns, and all required information reporting, will be required to be furnished for the last eight years on non-compliance.
This process would require the engagement of a US lawyer to enter into the program. The advantage of this route is that taxpayers will have a clear indication of where they stand in terms of penalty exposure. Choosing to go down this route is very much dependant on the taxpayer’s facts and circumstances and needs to be fully reviewed. Where there is a valid reasonable cause basis for not filing the returns, this may not necessarily be the best option.
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