The IRS is trying to prevent oversees citizens from choosing to not disclose the correct amount of the income that the citizen owns. The IRS called the program the Offshore Voluntary Disclosure Initiative or OVDI. The IRS created the program to discourage taxpayers from hiding their income in hidden bank accounts and in undeclared foreign income. The program acts like a penalty, however, the penalty is ineffective because the cost of compliance is too high to justify disclosure.
See Tax Analysts, Tax Justice for Americans Abroad, Wealth Strategies Journal, July 12, 2012.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
