US Taxpayers Offered Amnesty
February 9, 2011 Taxation in USA
The US Internal Revenue Service started a new amnesty initiative aimed at encouraging taxpayers to voluntarily reveal assets hidden in offshore bank accounts.
At a press conference held on February 8th in Washington, DC the US Internal Revenue Service (IRS) Commissioner Doug Shulman announced the immediate beginning of the Offshore Voluntary Disclosure Initiative (OVDI), which will allow taxpayers to clean up their tax affairs in return for reduced penalties.
Under the terms of the new OVDI, taxpayers who voluntarily disclose their previously undeclared assets and capitals will see the typical penalty will be reduced to 25 percent, compared to the current rate of 50 percent. Taxpayers with offshore bank accounts holding undeclared amounts of less than USD 75 000 will be eligible for an even further lowered penalty, at a rate of 12.5 percent. According to an IRS statement, the new program’s penalty charges will only be levied on “the amount in the foreign bank accounts in the year with the highest aggregate account balance covering the 2003 to 2010 time period.”
Taxpayers will also be required to pay backtaxes for the eight year period covered by the amnesty along with interest payments, and filing-delinquency payments. Describing the benefits for taxpayers in making a voluntary disclosure, Doug Shulman said, “This initiative offers them the chance to get certainty about how their [offenders] case will be handled. Just as importantly, those who truly come in voluntarily can avoid criminal prosecution as well.”
In 2009 the IRS ran a similar offshore information disclosure program, it was reported to have netted 15 000 submissions during the time it ran.
Photo by OECD