Amy S. Elliott’s article, IRS Answers Questions on Updated OVDP and Streamlined Filing, 2014 TNT 120-9 (6/23/14) summarizes selected comments of IRS officials at NYU’s recent Tax Controversy Forum.
Two IRS officials were present: Jennifer Best, senior adviser, IRS Large Business and International Division, and John McDougal, special trial attorney and division counsel, IRS Small Business and Self-Employed Division.
Why, according to the panelists, did the IRS implement the new Streamlined Filing Procedures? My take on the essence of what was reportedly communicated:
- To respond to criticisms that there was no helpful process for individuals who were not willfully culpable to come into compliance.
- To provide a different path to come into compliance for those considering quiet disclosures or those considering entering the OVDP and then opting out.
McDougal also made some comments about willfulness:
- Paraphrased by the author: “A person is non-willful if he “isn’t really worried about being prosecuted.”
- Quoted: “The concept of willfulness is well documented in the case-law,” and “We’re depending on the practitioners to help the clients work their way through what the risk is of criminal prosecution and significant penalties.”
- See my blog entry of June 19, “initial Thoughts on Changes to the Offshore Voluntary Disclosure Program and Streamlined Process for Non-Willful Taxpayers.”
- Those taxpayers who do not fall at the ends of the Bell Curve on willfulness will have to proceed with extreme care before bypassing the criminal amnesty offered by the OVDP for the potentially lower penalty and less costly process dangled by the Streamlined Filing Procedures.
- Willfulness is a wiggly term and how one views the facts can have a great impact on what conclusion one draws about culpability. The rule, “Intentional violation of a known legal obligation,” is easier to state than to apply to the myriad of factual situations one encounters in the offshore environment.
- Clients will not be able to on their own certify that they have been non-willful and will require the assistance of experienced tax counsel with good judgment to make that determination.
- What burden of proof will the IRS apply in deciding whether a client has truthfully certified non-willful conduct: Preponderance of the evidence, or, clear and convincing proof?
- The Certification appears to place the burden of proving non-willfulness on the taxpayers although IRS bears the burden of proving willfulness in an FBAR civil penalty suit.
The above are just a few more thoughts about the new Streamlined Procedures which will have to be considered individually for each client’s particular situation.
© 2014 by Robert S. Steinberg, Esquire
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