FATCA Fuels IRS Amnesty, But Advocate Calls It Harsh
It’s no secret that the IRS has pushed hard on offshore accounts and income, raking in billions in taxes, penalties and interest. In some ways, not much has changed since 2009. The IRS was already having big successes with its push into offshore banks. It was breaking down virtually every international barrier to information. But in other ways, 2014 dawns as radically different from the last five years.
It is now clear that FATCA is a bigger success than anyone could have imagined. The IRS is getting quicker, better and more complete information than it did in the past, and the sources are many. And FATCA will expand it like a fire hose.
According to the IRS Taxpayer Advocate, the IRS Offshore Voluntary Disclosure Program isn’t a very good deal for many. The voluntary disclosure wave started in 2009, and when that program ended, another replaced it in 2011.
According to Taxpayer Advocate, the program imposes excessive penalties on taxpayers whose failure to file were not willful. What is willful is a key concept in the tax law. Analyzing results from the IRS’s 2009 program, the Advocate found the median offshore penalty was about 381% of the additional tax assessed for taxpayers with median-sized account balances.
Original story on Forbes.