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Question

Hello,

I’m a US citizen (born in the US), but have lived in Canada for my whole life. In 2011 I decided to enter the IRS’ 211 OVDI program to get caught up on my US tax returns. In retrospect I think it wasn’t such a great idea considering the new streamlined filing procedures that just got announced in September. Also, I have several other US friends that simply filed the last 6 years of tax returns and they seem to be ok.

I’m now considering opting out of he program into the new streamlined procedures. I’m eligible for the new program given the recent requirements.

Have you had any of your client opt out of the program?

Thanks for your time.

XXXXXX

Answer

Hi XXXX

For those taxpayers that entered either the 2011 or 2012 OVDI (OVDP) program, there is an opportunity to “opt-out” of OVDI and enter into the new streamlined tax filing procedures announced in September of 2011. The challenge however is that the IRS has yet to give any formal guidance on how to opt out of OVDI and opt in to Streamlined Filing Procedure.

Recently David Horton, Director of IRS LB&I Individual International stated that two avenues of filing are available to US non filers, the 2012 OVDP and the new Streamlined Tax Filing Procedures. All long as you’re eligible for either program “you could come in under [OVDP] or you can come in under streamlined if that is a better process for you.” said Mr. Horton.

It’s our guess that the IRS will allow taxpayers that entered either OVDI 2011 or OVDP 2012 to opt out into the new streamlined procedures if they qualify. That being said, the IRS has yet to formally release any procedures for this “opt out” and it would be wise to wait until you’re contacted by an OVDP agent to discuss the implications for the opt out. Also note that once you’ve opted out of the OVDP, you are not longer shielded from criminal prosecution.

Please feel free to give us a call at 250-381-2400 to discuss further.

Regards

 

2 Responses to “Opting Out of OVDI Into IRS Streamlined Filing Procedures”

  1. Ron says:

    My wife is a dual US/Canadian citizen who was born and has only ever lived in Canada. We (I say “we” because of the foreign accounts and assets we own jointly) entered the OVDI in the fall of 2011. Our case was reviewed last week by an IRS agent in Austin. She contacted our counsel with a letter that stated…”So, you want to opt out of the OVDI”. Funny thing is that neither my wife, nor I, nor our counsel at any point indicated that we want to opt out. Understand that the initiative for opting out is coming from the AGENT HERSELF. Our case is particularly well-suited to the Streamlined program, and so this is what she is softly and off-the-record recommending in order to avoid the OVDI penalty, which in our case would likely be the 5%. For us, to opt out of OVDI and go into Streamlined would be to trust an IRS agent. Another funny thing is that 5 of the 8-page letter from that agent listed the penalties that could be brought to bear if opt out of OVDI and are exposed to audit and conviction. To trust or not to trust, that is the question. Anybody want to comment on the trustworthiness of the IRS and its agents? LOL

  2. Steve Winkler says:

    Phil.. I entered under the OVDI in 2010 and was accepted. I now have received a request through my US Tax preparer here in Edmonton where the IRS is requesting that I opt-out of the OVDI. I am just wondering what benefit is it for me to opt-out of the OVDI.. Is this an IRS tactic .. Any ideas..Thanks

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Philip Hogan

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The information contained in this article is for general use only and should not be viewed as professional advice. Accounting and tax rules and regulations regularly change and individuals should contact a competent professional to obtain accounting and tax advice based on their specific situation.

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