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Tax Notes Quotes Scott Michel on IRS Adding 47 Facilitators to Increased OVDP Penalty List
Caplin & Drysdale

Tax Notes Quotes Scott Michel on IRS Adding 47 Facilitators to Increased OVDP Penalty List

Date: 10/18/2016

Tax Notes interviewed Scott D. Michel concerning the IRS adding 47 entries to the list of foreign financial institutions or facilitators (i.e., lawyers or asset managers) that trigger the increased 50 percent penalty under the offshore voluntary disclosure program (OVDP).  Under the current version of the OVDP, a taxpayer who is the client of or holds an undeclared account at one of the named facilitators or financial institutions will face a 50 percent miscellaneous offshore penalty, rather than the standard 27.5 percent. The new names are effective November 15.  Just six of the new names are entities; the rest are individuals.  For the full article, please visit Tax Notes’ website (subscription required).

Excerpt taken from the article “IRS Adds 47 Facilitators to Increased OVDP Penalty List” by Nathan J. Richman for Tax Notes.

Scott D. Michel of Caplin & Drysdale Chtd. said, "It seems pretty clear that the IRS wanted to add to this list the names of a number of facilitators, whether they be lawyers or asset managers or the like, who had cases that have been public for quite a while, and fold them into the 50 percent penalty level." While these names could have been added sooner, the IRS was previously focused on institutions such as the banks, he said.

Michel said that he does not expect a new flood of OVDP disclosures due to the additions. "You would think that anybody for whom Bradley Birkenfeld was a financial adviser would have long since evaluated that they were in a risky position and initiated some kind of a disclosure," he said. However, some holdouts may disclose as a result of publicity connected to the additions or the four-week grace period, he said. Some of the new names may have been asset managers for U.S. taxpayers who had foreign accounts at banks other than the category 1 and 2 banks that had filled out the list before October 14, he added.

Mossack Fonseca & Co., the Panamanian law firm at the center of the Panama Papers leak, is not represented in the additions.

Both Sweeney and Michel said that it is not surprising that no names connected to Mossack Fonseca were included in the new batch of names because no public documents such as indictments have named the law firm yet nor has there been any public IRS summons activity, such as the issuance of a John Doe summons or the filing of an enforcement action.

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