What is Willfulness? The Streamlined Disclosure Program And What We Know

U.S. taxpayers with unreported foreign accounts or assets are in an increasingly precarious position. The IRS has repeatedly announced that it is devoting resources to finding and penalizing taxpayers who do not disclose such offshore accounts and assets. In addition, many U.S. taxpayers, both domestic and international, are facing intense pressure from foreign banks to disclose their U.S. taxpayer status or close their accounts.

IRS Disclosure Programs

Most taxpayers and their representatives now are aware of the various programs allowing taxpayers to correct foreign reporting delinquencies. Starting in 2009, the IRS offered the Offshore Voluntary Disclosure Program ("OVDP") as a means for taxpayers to avoid criminal penalties and secure fixed terms when resolving civil liabilities. Under the OVDP, taxpayers are subject to a 27.5% penalty on the highest aggregate balance of their undisclosed accounts and must pay taxes on undisclosed income for the previous eight