12 000 US Tax Evaders Disclose Info

September 16, 2011 Offshore BankingTaxation in USA

Douglas ShulmanThe 2011 Offshore Voluntary Disclosure Initiative run by the US Internal Revenue Service is being hailed as a success, having resulted in over 12 000 American taxpayers coming forward to disclose funds and capitals previously hidden in overseas bank accounts.

In a statement made on September 15th the US Internal Revenue Service (IRS) said that the Offshore Voluntary Disclosure Initiative (OVDI) was a successful operation in the continued fight of the IRS against international tax evasion. The Initiative, which ran from February 2011 to September 9th, has already resulted in USD 500 million in taxes and interest payments being paid by participants. The payments are expected to rise even further in the coming months as the IRS finalizes and charges all applicable penalties on the unpaid taxes.

Commenting on the results of the OVDI the IRS Commissioner Doug Shulman pointed out that the goal for the program was not just to raise tax revenues but also to decrease the occurrence of tax evasion. He added, “…Americans now understand that if they try to hide assets overseas, the chances of being caught continue to increase.” Since the start of 2009 the IRS has collected over USD 2.7 billion from disclosures made during OVDI programs.

The 2011 OVDI allowed taxpayers to disclose their offshore incomes and assets, in exchange for lowered penalties and some protection from ensuing criminal prosecution. The penalty rate incurred for funds held in previously undisclosed bank accounts was capped at 25 percent of the highest balance on the account. Taxpayers are also liable to pay all back taxes and late fees owing on the undisclosed incomes for the last eight years.

Photo by OECD