US: Taxpayers lose Appeal for Simplified OVDP

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A group of US taxpayers have lost their appeal to force the Internal Revenue Service (IRS) to provide them with its simplified overseas voluntary disclosure programme (OVDP). Under the ‘streamlined’ OVDP, the US taxpayers would be able to claim untaxed offshore funds with minimum penalties.

The taxpayers desired an injunction which would prevent the IRS from designating them to its substitute ‘transition relief’ OVDP. Through the ‘transition relief’ OVDP, the claimants are required to pay a total of eight years of income tax, interest and penalty, rather than three years under the streamlined system.

However, a court in Washington DC rejected their plea under a clause in the tax code which prohibits any lawsuit that may have the effect of enjoining the Internal Revenue Service in its tax collection and enforcement activities, (Maze v United States, DC Cir. 2017)

The 2012 OVDP allows the taxpayers to settle the majority of possible penalties for which they would be accountable for by means of a lump-sum agreement of 27.5% of the aggregate value of all of their foreign assets. This is maintaining that clear filing requirements and payment are met.