U.S. Internal Revenue Service Updates Voluntary Disclosure Procedures

The U.S. Internal Revenue Service has finally updated its voluntary disclosure procedures following the closure of the Offshore Voluntary Disclosure Program (the "OVDP") earlier this year.  The updated procedures will apply to all voluntary disclosures made after September 28, 2018.

Prior to its closure, the OVDP provided non-compliant taxpayers with a fixed civil penalty framework and protection from criminal prosecution for failing to file correct and complete U.S. Federal tax returns and non-U.S. financial account disclosures (typically referred to as "foreign bank account reports" or "FBARs"). While the updated procedures will continue to provide non-compliant taxpayers with protection from criminal prosecution, the civil penalty framework is no longer fixed and the overall cost of making a disclosure will likely be significantly higher.