The Internal Revenue Service (IRS) has announced a new amnesty program for those who are hiding assets internationally. It is the second special voluntary disclosure initiative encouraging offshore tax cheaters to turn themselves in.
The newly announce initiative is called the 2011 Offshore Voluntary Disclosure Initiative which includes some changes from the earlier 2009 Offshore Voluntary Disclosure Program. The IRS has instituted a harsher penalty structure for 2011 along with a few added features.
This is the second attempt by the IRS to bring forth more individuals who are guilty of tax evasion by hiding assets offshore. On October 15, 2009, the first special voluntary disclosure program closed with 15,000 voluntary disclosures covering accounts in more than 60 countries. Additionally, over 3,000 taxpayers participating in offshore tax cheats have come forward.
“As we continue to amass more information and pursue more people internationally, the risk to individual 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 2011 Offshore Voluntary Disclosure Initiative
According to the IRS, the prominent changes of the 2011 amnesty program include:
- Participants face a 25% penalty, but taxpayers in limited situations can qualify for a 5% penalty.
- A new penalty category for smaller offshore accounts was created. Taxpayers whose offshore accounts or asset did not exceed $75,000 in any calendar year covered by the 2011 initiative will qualify for a lower 12.5% penalty.
The IRS amnesty programs are designed to lure offshore tax cheaters to disclosure their foreign accounts in exchange for reduced penalties and save IRS resources. “Taxpayers hiding assets offshore who do not come forward will face far higher penalty scenarios as well as the possibility of criminal prosecution,” says the IRS.
Taxpayers who would like to participate in the new amnesty program and voluntarily disclose offshore assets and accounts have until the August 31, 2011 deadline to file all original and amended tax returns along with payments for skipped taxes, interest, and penalties.