Offshore Voluntary Disclosure Program (OVDP)

On March 29, 2023, the Senate Finance Committee (“the Committee”) issued a report (SFC CREDIT SUISSE REPORT FINAL Mar 28.pdf (senate.gov)) regarding its investigation of Zurich-based financial institution Credit Suisse AG (“Credit Suisse”). The purpose of the investigation was to understand whether the bank violated the terms of its plea agreement with the Department of Justice (“DOJ”). Credit Suisse, in 2014, became the largest bank in 20 years to plead guilty to a U.S. criminal charge, agreeing to pay a $2.5 billion fine for helping Americans evade taxes. The conspiracy spanned decades.

The Committee’s report makes clear that certain wealthy Americans continue to use secret bank accounts to hide massive amounts of income from the U.S. government and frequently do so with the help of foreign financial institutions. Although funding from the Inflation Reduction Act will play a critical role in enabling the Internal Revenue Service (“IRS”) to hire additional staff to investigate such schemes, the Committee recommends that several specific actions be taken in response to its findings. One of these actions is for the IRS to consider relaunching the Offshore Voluntary Disclosure Program (OVDP). The Committee believes that the IRS can send a clear message to noncompliant taxpayers by implementing another formal program and giving them one final chance to report all of their income before the additional funding leads to more aggressive enforcement action.

Thank you to Michelle E. Espey for this week’s Tax Tracker!