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Partner and Co-Chair of Baker Hostetler’s nationwide <a href="/taxcontroversylitigation/">Tax Controversy and Litigation Practice</a>, <a href="/JamesNMastracchio">Jim Mastracchio</a> commented on the IRS offshore voluntary disclosure initiative (OVDI) in BNA’s Daily Tax Report (“Taxpayers Fear Disclosing Offshore Assets As Deadline Approaches, Practitioners Say”) and Tax Analysts’ Tax Notes Today (Practitioners Assess Offshore Initiative as Deadline Approaches) on August 15, 2011. BNA reported that the IRS’s second initiative to allow taxpayers to voluntarily disclose assets held overseas is approaching its August 31 deadline, and though the IRS says it’s seeing progress, many practitioners, including Mastracchio, say taxpayers are unwilling to disclose assets as they are faced with tough penalties that could diminish their foreign bank accounts and related assets. Mastracchio said he’s seen “a dramatic dropoff” in voluntary disclosure participation since the 2009 program, explaining that it’s possible the first initiative was so successful that most of the people who would be interested in the program have already come in. Mastracchio also said, however, that “there is certainly a concern about the 25 percent penalty.” Taxpayers face “pretty severe” consequences if they do not meet the limited circumstances for the reduced penalty. “It's certainly causing people to think that they might be better off coming in outside of the program,” he said. Tax Notes reported that individuals who participated in the 2009 voluntary disclosure program are leaving the program to gain penalty relief. Mastracchio said that although the opt-out procedure was still in its early stages, he has talked with agents about the facts of his clients' cases in an attempt to reach an agreement, and in cases where taxpayers have been able to reach agreements with the agents, the process has been smooth.

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Tax Controversy and Litigation

Mastracchio Comments on IRS Offshore Voluntary Disclosure Initiative

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