As the U.S. continues to intensify its investigation of offshore banks and their U.S. taxpayer customers, the IRS has announced that it will be more lenient with holders of offshore banks accounts who come forward voluntarily, Tax-News.Com reports:
IRS Commissioner Doug Shulman has announced that a partial amnesty program being launched by the agency will see account holders avoid heavy penalties and possible criminal prosecution.
“This is a chance for people to come clean on their own,” he told reporters on March 26.
Current law provides that,
[I]f IRS investigators discover during the course of an audit that a taxpayer has not declared money held in offshore accounts or income accruing from offshore assets, they can impose penalties of up to 50% of the balance of an undeclared account for each year that it remained undisclosed.
In addition, interest will be owing on any unpaid tax.
The IRS may also refer the case to its Criminal Investigation Division (CID).
The voluntary disclosure program reduces the failure to file penalty and eliminates the possibility of a referral to CID:
Under the new scheme, the IRS will impose a penalty of 20% on the highest single account balance held over the past six years, and will agree not to initiate criminal proceedings against taxpayers if they volunteer information on their offshore accounts and earnings before they are audited.
The program will run for the next six months, and will also help the IRS to develop useful ‘intelligence’ not only on taxpayers with offshore accounts and other assets, but also on the banks and institutions that help manage their offshore financial affairs.
The IRS undertook a similar initiative in 2003 when it collected $170 million in unpaid tax and penalties as a result of its Offshore Voluntary Compliance Initiative (OVCI).
Under the three month OVCI, more than 1,300 taxpayers came forward, amended their returns, paid taxes, interest and penalties and furnished the IRS with information regarding the person who promoted the offshore arrangements to them.
According to the IRS, some 479 promoters of tax schemes were identified during the course of the partial amnesty, half of whom were previously unknown to the tax agency.
Advice: If you have owned a foreign bank account in the past five years and have not disclosed it to the IRS, we urge you to take advantage of the IRS’s voluntary disclosure program. If you do not do so and the U.S. discovers your non-compliance on its own, you can expect it to assess the full amount of penalties and seriously consider criminal prosecution.
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Will IRS Voluntary DIsclosure Practice Help UBS Clients
15 responses so far ↓
1 Catherine T // Apr 20, 2009 at 12:55 am
I confuse about reading all these offshore banking. Are the Foreign Bank in the country where we live oversea consider to be an Offshore bank?
2 Peter // Apr 20, 2009 at 9:12 am
Catherine,
I assume you file a U.S. tax return.
If so, you must report your foreign bank accounts on FBAR TD 90-22.1.
This could be a big problem if you’ve held that account for several years without filing.
3 Foreign Bank Accounts: Who Must File Treasury Department Form 90-22.1 // Apr 21, 2009 at 3:18 am
[...] short of promising amnesty, IRS Commissioner Doug Shulman has publicly pleaded with
4 6 Months Left For IRS’ Offshore Account Partial Amnesty // Apr 21, 2009 at 8:44 pm
[...] as we have pointed out before, woe to those who fail to take advantage of the voluntary compliance, amnesty program: Shulman told [...]
5 Offshore Tax: IRS Issues FAQs on Voluntary Disclosure // May 10, 2009 at 9:12 am
[...] IRS Urges Foreign Bank Account Holders to Come Forward Voluntarily [...]
6 FBAR // Jun 11, 2009 at 12:09 pm
Good information on the FBAR Voluntary Compliance. From what I understand the IRS is going to be very aggressive in pursuing violators and the potential penalties of non-compliance are devastating!
7 Peter // Jun 11, 2009 at 3:41 pm
FBAR,
Thanks for the comment.
You are correct. The IRS is going to be aggressive in pursuing non-compliers and the penalties are absurd.
8 Cyprus // Aug 14, 2009 at 11:51 am
“well, we all know theirs huge benefits to register a company in Cyprus, lol. My account pointed me to a few blogs on the net which i’m rather reluctant to check out as i’ve been so busy lately”
9 Sean // Aug 19, 2009 at 2:45 pm
I believe FBAR disclosure is neccesary if aggregate accounts exceed USD10,000, correct?
10 UBS Taxpayer Disclosure Update // Aug 20, 2009 at 12:34 am
[...] last day to come foward under the voluntary disclosure program is September 23, [...]
11 patricia // Sep 15, 2009 at 9:22 pm
Wouldn’t it possible for someone to withdraw all the money from their account before the irs realizes its existence?
12 Peter // Sep 15, 2009 at 10:43 pm
No. The financial institution has records.
And it’s a felony not to report the income earned from the foreign account.
13 IRS Amnesty Deadline is October 15th: UBS Says More than 5,000 U.S. Investor Names to be Disclosed // Oct 8, 2009 at 12:12 pm
[...] IRS Urges Foreign Bank Account Holders to Come Forward Voluntarily Bookmark & Share: [...]
14 IRS Alert: Last Day to File For Tax Amnesty Protection // Oct 15, 2009 at 10:15 am
[...] IRS Urges Foreign Bank Account Holders to Come Forward Voluntarily Bookmark & Share: [...]
15 IRS Commissioner Talks About Offshore Tax Enforcement // Dec 11, 2009 at 11:13 pm
[...] [...]
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