IRS Announces Much-Anticipated Updated Voluntary Disclosure Procedure

When the United States Internal Revenue Service announced in March 2018 that it would be terminating the Offshore Voluntary Disclosure Program (OVDP) on September 28, 2018, many taxpayers and practitioners were left wondering whether there would be a successor program that would provide potentially "willful" taxpayers who have failed to disclose foreign financial assets and accounts (Foreign Accounts) to the US government with an avenue to disclose such Foreign Accounts while potentially avoiding criminal prosecution.¹ On November 29, 2018, the IRS released a much-anticipated memorandum (Memorandum that explains its updated voluntary disclosure practice (VDP).

The Memorandum sets forth the procedures that taxpayers with undisclosed Foreign Accounts must follow to avoid potential criminal prosecution and mitigate exposure to monetary penalties. Notably, the VDP is available in connection with both domestic and offshore disclosures. Applications to the VDP require