OVDI Is Back!
IRS Reopens Offshore Amnesty Program
In an effort to collect more in tax revenues from people hiding money in offshore accounts, the Internal Revenue Service just announced that it is reopening its offshore voluntary disclosure program. The program follows up similar efforts to help folks (33,000!) get current with their tax obligations in 2009 and again last year. Maybe the third time will be a charm and reel in the rest of these folks.
This time there is no definite end date to the program. Instead the IRS announcement says that the terms of the program could change at any time going forward, including the possibility of increasing penalties, an apparent effort to get folks to fess up sooner rather than later. “We have billions of dollars in hand from our previous efforts, and we have more people wanting to come in and get right with the government,” says IRS Commissioner Douglas Shulman in an IRS news release. The IRS says that hundreds of individuals have come in since the close of the 2011 program, and they will be put in the 2012 program.
The IRS collected $3.4 billion from participants in the 2009 program (95% of these cases are now closed), and another $1 billion from upfront payments required under the 2011 program.
For the 2012 program, the highest penalty category has gone up, from 25% to 27.5%. Here’s how it works. Individuals must pay a penalty of 27.5% of the highest aggregate balance in foreign bank accounts (or entities or value of foreign assets) during the eight full tax years prior to the disclosure. Some taxpayers will be eligible for 5% or 12.5% penalties as in the 2011 program. Who can get a break? Folks who have inherited bank accounts, for example.
You can find official IRS Release here: http://www.irs.gov/newsroom/article/0,,id=252162,00.html