The government recently released thousands of pages of training material and internal IRS guidance on the Offshore Voluntary Disclosure Program (“OVDP”). The government issued the material in response to a Freedom of Information Act request (“FOIA”) made by the Brager Tax Law Group in Los Angeles. The firm made the request as a result of interactions with revenue agents in which the agents reversed their positions after consultation with a technical adviser yet offered little explanation or rationale for the reversal.

Practitioners seasoned in the OVDP process say the materials contain few surprises. For example, the materials confirm assumptions regarding some internal IRS practices, such as the virtual inapplicability of the former 5% reduced OVDP penalty. However, the documents do highlight some areas of confusion for the IRS. For example, one document states that the belief that a return is not due, no matter how reasonable, is not reasonable cause for failure to file, despite case law indicating that, depending on the education of the taxpayer, reasonable cause may exist.

Despite the large volume of information released, the IRS redacted some information. Additionally, the IRS withheld over 700 pages of documents, and it didn’t release any substantive emails or memoranda. However, the training materials released are thorough and offer practitioners and taxpayers valuable insight into how the IRS views critical OVDP issues.