What's the difference between the OVDP and the Streamlined Procedure?
The IRS offers two programs for taxpayers who are currently noncompliant: the Offshore Voluntary Disclosure Program (OVDP) and the Streamlined Procedure (SP). Most attorneys will recommend the OVDP while tax preparers tend to favor the SP. We believe that most clients are significantly better off using the Streamlined Procedure.
The OVDP, which requires the assistance of a lawyer, represents a huge expense. It involves filing 8 years of tax returns, paying tax and penalties due for all years, paying FBAR civil penalties, and of course paying your lawyer’s fee. In other words, it's a much better deal for the attorney involved than for the client.
The Streamlined Procedure, on the other hand, only involves filing 3 years of returns and 6 years of FBARs. Most importantly, the fees are automatically waived. The overall cost to the client is also significantly less. (The cost of an attorney alone for the OVDP starts at $10,000, and that’s on top of tax preparation fees.)
The only time we recommend the OVDP is when the IRS has already started a civil investigation. In such cases, the OVDP keeps the consequent penalties at bay.