IRS Drops Penalties for Voluntary Disclosures
June 28, 2012 Taxation in USA
WASHINGTON D.C. – US taxpayers who are classed as being low “compliance risks” may now disclose their previously hidden offshore accounts without facing penalties from the IRS.
On June 26th the US Internal Revenue Service announced that it is easing the rules on its current voluntary disclosure program for US taxpayers with undeclared assets held in bank accounts outside of the country.
From now on, taxpayers who come forward to reveal details of their offshore bank accounts will not face any late penalties or non-payment fees, if the total amount of taxes due on their undeclared incomes over any of the last eight years does not exceed USD 1 500.
According to the Commissioner of the IRS Douglas Shulman, the change is aimed at encouraging higher tax compliance and disclosure from taxpayers who have made small mistakes on their tax returns and have been too afraid to report the omission, or taxpayers who have moved overseas but have forgotten to comply with their US tax obligations.
The Commissioner revealed that the current disclosure program, which was launched in January 2012, has already led to 1 500 taxpayers coming forward and providing information on their previously undeclared bank accounts.
Since the IRS began running voluntary disclosure programs in 2009, the department has seen over 33 000 taxpayers come forward and disclose details of their offshore assets. The programs have already resulted in the IRS collecting approximately USD 5 billion in back taxes, interest charges and penalties.
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