OVDP Does Not Encourage Compliance

Five Stone is attending the 62nd Annual Taxation Conference held yesterday, December 3, 2014 and today, December 4, 2014. Yesterday included a great lecture from Nina Olsen, the National Taxpayer Advocate and the voice of the taxpayer before the IRS and Congress.


In her lecture she said, “OVDI [Offshore Voluntary Disclosure Initiative]is a roadmap to how not to encourage compliance with the US Government.”

Below are some statistics to support this claim, findings from 2009 by the LBI Division of the IRS.

  • Represented taxpayers with lowest HAB (highest aggregate balances) paid an offshore penalty that was 6X the unreported tax.
  • Represented taxpayers with highest HAB (highest aggregate balances) paid an offshore penalty that was 3X the unreported tax.
  • Unrepresented taxpayers (both low and high) paid an offshore penalty that was 8X the unreported tax.

Five Stone Tax Advisers' Take:

Based on these figures it is clear that the penalty structure offered under OVDP, especially under the 2014 program, is not in proportion with the actual unreported income. In order to foster true compliance, the IRS should invoke a simpler path to compliance with a penalty structure that is proportional and palatable. It should also be noted that based on the aforementioned numbers, unrepresented taxpayers pay the highest penalties regardless of where they fall in the spectrum.

About Five Stone Tax Advisers

Five Stone Tax Advisers has years of experience negotiating directly with the IRS to get the best possible outcome for you. Our International Tax Advisory and Compliance unit has a team of tax attorneys, certified public accountants and enrolled agents that form a single sourced point of contact that will provide services for all the legal, compliance and financial reconstruction aspects of offshore account cases.

Five Stone Tax
by Five Stone Tax

Five Stone Tax is America’s trusted tax adviser, offering full-service tax solutions with the goal of making sure all of our clients pay the lowest amount of taxes legally possible. As the most effective tax representation company in America, our team consists of the best Property Tax Consultants, Tax Attorneys, Enrolled Agents, case managers, and administrators in the industry.

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