IRS Offers Tax Cheats the Chance to Come Clean

January 10, 2012 Offshore BankingOffshore TaxationTaxation in USA

Douglas ShulmanWASHINGTON D.C. – Following the success of previous US offshore voluntary disclosure programs, the US tax authorities are once again offering taxpayers an incentive to reveal information about any bank accounts they have hidden overseas.

On January 9th the US Internal Revenue Service (IRS) announced that it has initiated another Offshore Voluntary Disclosure (OVD) program for taxpayers to declare their hidden offshore assets in exchange for lowered penalties.

The new program started on the day of the announcement, and will continue indefinitely. Taxpayers making use of the OVD will be required to reveal detailed information regarding their previously undisclosed assets and capitals hidden in offshore bank accounts.

In exchange for revealing the information, taxpayers will avoid the possibility of criminal prosecution, and will face a penalty rate of 27.5 percent of the highest amount held in the bank account during the last 8 years. Additionally, participants will be required to pay all back taxes owing and any applicable interest charges. Under current US tax regulations, the penalty rate levied by the IRS may be as high as 150 percent.

Individuals whose undisclosed assets and capitals did not exceed a maximum value USD 75 000 in the last 8 years can be qualified for a reduced rate of 12.5 percent.

According to the Commissioner of the IRS Doug Shulman, the last two OVDs have already netted over USDD 4.4 billion in recovered tax revenues and penalty fees, and the collections are expected to increase as investigations continue into taxpayers who came forward in the 2011 program. The last two disclosure programs saw over 33,000 US taxpayers come forward with details on their offshore bank accounts.

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