Taxpayers Fear Disclosing Offshore Assets As Deadline Approaches, Practitioners Say
Offshore Tax Compliance Chair Kevin Packman was quoted in an article in BNA's Daily Tax Report titled "Taxpayers Fear Disclosing Offshore Assets As Deadline Approaches, Practitioners Say."
The article reports that numerous practitioners told BNA in a series of recent interviews that the Internal Revenue Service's effort to get taxpayers to tell the government about their offshore assets may be running into difficulties even as IRS continues its crackdown on foreign banks that help taxpayers hide those assets. As the August 31 deadline approaches for participation in IRS's second initiative to allow taxpayers to voluntarily disclose assets held overseas, the agency said it is seeing progress; however, practitioners said significantly fewer taxpayers appear to be willing to participate in IRS's Offshore Voluntary Compliance Initiative when compared to the total who came in under a similar program in 2009. Mr. Packman told BNA that the 'biggest tragedy' associated with the current program is subjecting some assets to a penalty that would never be subjected to a penalty otherwise, but said uncertainty remains for those taxpayers who decide not to come in until later. Those taxpayers will have to use the process for voluntary disclosure that was in place before either special program, and, “if you have bad facts, you're going to have an unknown penalty,” he said. Once taxpayers enter the program and discover what they will be facing in terms of penalties, "there are instances where opting out may make sense for you." He and other practitioners noted that the outcome of such opt-outs, which put taxpayers back into a regular audit, remains unclear. “The reality is that none of us know. Nobody I know has gone through it yet. We're telling clients that they should expect any issue they have in early years to be looked at closely,” he said.