OVDP vs Streamlined (IRS Summary 2020)

By Golding & Golding Board-Certified Tax Law Specialist on February 28, 2020

OVDP vs Streamlined: Comparing Offshore Amnesty Programs

OVDP vs Streamlined: The comparison of OVDP vs Streamlined is complex. While the IRS continues to aggressively enforce foreign accounts compliance, they closed OVDP. Subsequent to closing OVDP, the IRS expanded the traditional IRS voluntary disclosure program (VDP). Under the updated procedures, the FBAR penalties and other fines for not properly reporting offshore accounts, assets, investments and income have significantly changed. The decision between OVDP vs. Streamlined is a big decision, which has various components to it, including:

OVDP vs Streamlined

The IRS OVDP vs Streamlined Offshore comparison is complex. When a U.S. person has offshore or foreign accounts, assets, investments & income that has not been properly reported to the IRS, they have a decision to make, they can either:

Submit to OVDP (Updated in 2018/2019)
Submit to the Streamlined Program or Delinquency Procedures
Prepare a Reasonable Cause Application
Make a Quiet Disclosure.

The OVDP Program was Updated

OVDP vs. Streamlined analysis has changed, since OVDP ended on September 28, 2018. Streamlined Offshore Disclosure is still available, but that soon too will be over.

In the meantime, you still have options. The IRS updated and expanded the traditional IRM (Internal Revenue Manual) Offshore/Voluntary Disclosure Program — which is great for people who’s main non-compliance is foreign business reporting (5471, 8865) and not so good for people who primarily need to get into compliance because of undisclosed bank and financial accounts.

The new penalty structure follows general willful FBAR rules, which currently has a “floor” minimum penalty of $100,000.

What are the Current Offshore Disclosure Options?

There are 5 main versions of the program. Here are the 5 Main Options:

(New) Updated Traditional IRS Voluntary Disclosure Program

When OVDP (Offshore Voluntary Disclosure Program) ended back in September 2018, the Internal Revenue Service was unclear as to whether a New “Offshore” Voluntary Disclosure Program would be introduced. Instead of a “new program,” the traditional voluntary disclosure program was expanded.

You can use the disclosure program to submit FBARs for your Foreign Bank Accounts, FATCA, PFIC, along with your Domestic Income

Resource: Summary of the Traditional IRS Voluntary Disclosure Program

SFCP – IRS Streamlined Filing Compliance Procedures

IRS Streamlined Filing Compliance Procedures are a stand-alone “streamlined” version of the traditional OVDP. The “stand-alone” streamlined filing procedures were created in 2014 by the Internal Revenue Service.

The purpose of the procedures are to assist taxpayers who were noncompliant with offshore reporting requirements – but were also non-willful.

If the Taxpayer can certify under penalty of perjury of being non-willful, the IRS reduces the penalty structure, and even waives the penalty for applicants who qualify as foreign residents.

Resource: Golding & Golding’s IRS Summary of IRS Streamlined Filing Compliance Procedures

SDOP – IRS Streamlined Domestic Offshore Procedures

SDOP is the Streamlined Domestic Offshore Procedures, and it is the program designed for for U.S. persons residing in the United States (or do not meet the technical “Foreign Resident Test”)

Resource: Golding & Golding’s IRS Summary of IRS Streamlined Domestic Offshore Procedures

SFOP – IRS Streamlined Foreign Offshore Procedures

SFOP is the Streamlined Foreign Offshore Procedures. These are the Procedures for U.S. persons residing outside the United States is referred to as the Streamlined Foreign Offshore Procedures.

Resource: Golding & Golding’s IRS Summary of IRS Streamlined Foreign Offshore Procedures

DIRP – Delinquency Procedures for Offshore & Foreign Accounts and Assets

If you do not have any unreported income resulting in having to amend your tax returns — and all you have is unreported foreign assets, accounts or investments with no unreported income, you may be in luck. In these instances, in which you do not otherwise need to file for traditional offshore disclosure or the Streamlined Filing Compliance Procedures — you may qualify for the Delinquency Procedures and avoid any penalties.

Resource: Golding & Golding’s IRS Summary of Delinquent International Informational Return Submission Procedures

RC – Reasonable Cause for Offshore & Foreign Accounts and Assets

Reasonable Cause may be an option for some taxpayers. Specifically, if you were completely non-willful in your failure to disclosure, and were unaware that there was any reporting requirement, then the thought of paying any penalty may sound absurd.

Resource: Golding & Golding’s Summary of IRS Reasonable Cause for Offshore & Foreign Accounts & Assets

What if I am Non-Compliant?

It is important that if you are non-compliant, that you consider making an offshore disclosure submission. This will help to reduce, minimize, and/or even avoid penalties.

Here is a brief list of the potential penalties you can get hit with by the IRS:

Recent Updates about Streamlined Offshore

Over the past year or so, the IRS has updated the Streamlined Filing Compliance Procedures (SFCP). The IRS has issued formalized updates, insomuch as the IRS has provided the following informal updates that you should be aware of:

– There is not a separate Streamlined Program for Cryptocurrency.

– The IRS will end the Streamlined Program “sooner as opposed to later.”

– The IRS is increasing the number of Streamlined Disclosure audits.

Golding & Golding: About our Firm

We specialize exclusively in international tax, and specifically IRS offshore disclosure.

We have successfully represented clients in more than 1,000 streamlined and voluntary offshore disclosure submissions nationwide and in over 70-different countries. We have represented thousands of individuals and businesses with international tax problems.

We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe.

*Beware of less experienced copycat firms misleading the public about the streamlined procedures and IRS offshore disclosure.

Less than 1% of Tax Attorneys Nationwide Are Certified Specialists

Sean M. Golding is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.

Less than 1% of Tax Attorneys Nationwide Are Certified Specialists

Recent Golding & Golding Case Highlights

We represented a client in an 8-figure disclosure that spanned 7 countries.
We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.

How to Hire Experienced Streamlined Counsel?

How to Hire Experienced Offshore Counsel?

Generally, experienced attorneys in this field will have the following credentials/experience:

Board Certified Tax Law Specialist credential
Master’s of Tax Law (LL.M.)
Dually Licensed as an EA (Enrolled Agent) or CPA
20-years experience as a practicing attorney
Extensive litigation, high-stakes audit and trial experience

Interested in Learning More about Golding & Golding?

No matter where in the world you reside, our international tax team can get you IRS offshore compliant.

Golding & Golding specializes in FBAR and FATCA. Contact our firm today for assistance with getting compliant.