IRS Agrees to Increased Enforcement of IRS’s Offshore Voluntary Disclosure Program

Both Prior Submissions and Future Submissions Effected
(Announced by Government June 21, 2016)

Treasury Inspector General’s Report Issued to Internal Revenue Service Criminal Division and International Division

In a report issued to the Internal Revenue Service International Division and Criminal Division, the Treasury Inspector General for Tax Administration (TIGTA) found that taxpayers trying to avoid criminal charges and monetary fines by participating in the Offshore Voluntary Disclosure Program (OVDP) had been incorrectly analyzed.

The OVDP is designed to allow taxpayers to report previously unreported offshore bank accounts and allows taxpayers to report offshore accounts in exchange for a set lower penalty and no criminal investigation or prosecution. TIGTA’ s findings were that the IRS should have assessed millions more in penalties, and thus, made the following recommendations to the IRS civil and criminal divisions (note for brevity, only three of the six recommendations are discussed below). IRS management agreed to take TIGTA’s recommendations and has taken plans to implement them.


  1. Review all denied or withdrawn offshore voluntary disclosure requests identified in this report for potential FBAR penalty assessments and criminal investigation:

    TIGTA recommended that the IRS International Division review all denied or withdrawn requests for FBAR penalty assessments and possible referral to IRS Criminal Investigation Division. In the Management’s Response the IRS agreed with this recommendation and has had technical specialists review all withdrawn and denied requests.

    From a tax defense perspective, a re-review subjects the taxpayers to potential civil and criminal exposure – not to mention, attorney fees, stress, fear, and monetary and liberty considerations. Another potential ramification is that the re-review will open the door to potential false statement allegations if the original submission is found to be not fully accurate or complete.

  2. Develop procedures for reviewing denied and withdrawn cases for further compliance actions:

    The TIGTA did not define “further compliance actions” and the IRS management stated that it agreed to come up with procedures for reviewing denied and withdrawn cases. From a tax defense perspective the procedures developed will likely include a re-review of denied and withdrawn cases for criminal and civil action.

  3. Centrally track and control OVDP requests to ensure better communication between Criminal Investigation and OVDP:

    Currently, in order to complete the OVDP, several IRS groups are involved – Criminal Investigation Division, the OVDP Unit, and examination units. Each is responsible for its role in the OVDP and TIGTA has determined that information garnered by each group is not being adequately shared (and thus leveraged) between the units. By centralizing control, it is believed that the IRS will be far more efficient in analyzing information for maximum government benefit, both as to the criminal prosecutions and as to the imposition of more and larger monetary penalties.

What is TIGTA?

The Treasury Inspector General for Tax administration (TIGTA) is an office in the United States Federal Government. It is independent of the Internal Revenue Service and reports directly to the Secretary of the Treasury and to Congress promoting the administration of the federal tax system.

Moskowitz LLP’s Recommendations to Taxpayers:

If you have or have had offshore bank accounts or foreign asset or foreign income, we recommend that you immediately consult with an experienced international tax attorney. The U.S. government has imposed unprecedented criminal and monetary penalties related to offshore accounts, assets, and income, and is clearly looking to make sure that no one is slipping through its system without receiving ‘punishment’. Basically, there is blood in the water, and the sharks are now here.

Moskowitz LLP is a tax law firm representing individuals and businesses both internationally and domestically. It is our mission to successfully defend our clients, while preserving their personal freedom and financial lives, through the experienced pursuit of all legal strategies available to achieve the desired favorable outcome.