Last Chance Amnesty for Tax Evaders with Offshore Accounts

Taxpayers using offshore accounts to hide money from Uncle Sam have been given a second chance to come clean and avoid criminal prosecution. The Internal Revenue Service’s 2011 Offshore Voluntary Disclosure Initiative (OVDI), which began last week, will be in effect until August 31 this year. The amnesty program is intended to bring tax revenue back to the U.S. and help people get current with their taxes before they get in trouble with the law.

“As we continue to amass more information and pursue more people internationally, the risk to individuals hiding assets offshore is increasing,” said IRS Commissioner Doug Shulman. “This new effort gives those hiding money in foreign accounts a tough, fair way to resolve their tax problems once and for all. And it gives people a chance to come in before we find them.”

The IRS decided to open the disclosure a second time around due to continued interest from taxpayers in this situation. The first run of the amnesty program, the 2009 Offshore Voluntary Disclosure Program (OVDP), closed on October 15, 2009 with nearly 15,000 taxpayers admitting they had money hidden across about 60 countries.

More than 3,000 additional taxpayers have come forward since that time and will also be eligible to participate in the OVDI.

Shulman said, “Combating international tax evasion is a top priority for the IRS. We have additional cases and banks under review. The situation will just get worse in the months ahead for those hiding assets and income offshore. This new disclosure initiative is the last, best chance for people to get back into the system.”

The 2011 OVDI differs from the 2009 OVDP. The program from 2009 penalized taxpayers up to 20% covering a six year period.

The penalty structure is higher for 2011 so taxpayers who did not come forward in 2009 will not be rewarded for their delay. Taxpayers are penalized up to 25% for the year with the highest aggregate offshore account balance covering the 2003 to 2010 time period.

For taxpayers whose offshore assets did not exceed $75,000 in any calendar year during the 2003 to 2010 period, the penalty is half that at 12.5%. Some taxpayers in certain situations will qualify for a penalty of only 5%, but the IRS does not state what those certain situations are.

To participate in the 2011 OVDI, taxpayers must file all original and amended tax returns and include payment for back-taxes, interest, delinquency penalties, and accuracy-related penalties for up to eight years by the August 31st deadline.

“This is a fair offer for people with offshore accounts who want to get right with the nation’s taxpayers,” Shulman said. “This initiative offers them the chance to get certainty about how their case will be handled. Just as importantly, those who truly come in voluntarily can avoid criminal prosecution as well.”

“Tax secrecy continues to erode,” Shulman said. “We are not letting up on international tax issues, and more is in the works. For those hiding cash or assets offshore, the time to come in is now. The risk of being caught will only increase.”

To give taxpayers more information on the 2011 Offshore Voluntary Disclosure Initiative, the IRS launched a new section on www.IRS.gov.


Source:
Internal Revenue Service