According to your Maryland tax attorney, the IRS uses a five step and repeat approach process in regards to OVDP. This process has been quite successful in identifying banks on the blacklist and tax haven jurisdictions. The five step process is as follows:
Whether it is OVDP or another type of disclosure program such as misclassification of workers by employers, the IRS begins by identifying targeted groups or classes of taxpayers that are suspected of non-compliance.
Once the IRS has identified the group of taxpayers, it begins to collect information. The collection of information can occur in several ways. the Department of Justice can open an investigation on a foreign bank or facilitator. With specific information, the DOJ can file a summons to request the disclosure of information. With the implementation of FACTA (foreign account tax compliance) the IRS can receive real-time data directly from foreign banks.
Once data has been collected, the IRS will announce the disclosure of information to the public. These announcements are tied directly to OVDP. If your foreign bank or facilitator has been named as being under investigation you can seek the protection of OVDP.
The IRS has a large and dedicated team that has extensive audit experience. This is an audit of the information provided by taxpayers who utilized OVDP.
The IRS uses the results from the audits to data mine new groups of taxpayers which starts the process all over again. The IRS and DOJ will issue clear warnings that will encourage U.S. taxpayers to participate in the program. The end result is compliance.
Call us today with your questions about The Offshore Voluntary Disclosure Program before it is too late.