12 Jan Third Offshore Voluntary Disclosure Program Announced by IRS
In 2009 and 2011 the Internal Revenue Service (IRS) created two temporary initiatives to allow U.S. taxpayers with unreported income relating to undisclosed foreign bank or financial accounts to make a voluntary disclosure to get current with their taxes and information filing obligations. On Monday, January 9, 2012, the IRS announced a third initiative with terms largely similar to that of the 2011 Offshore Voluntary Disclosure Initiative (OVDI).
Like its predecessors, the 2012 OVDI offers a simplified penalty structure compared to that present under applicable law and protection for taxpayers concerned with criminal sanctions. 2012 OVDI participants must also look back eight years and file all original and amended tax returns to include unreported offshore income and make payment for back-taxes, interest, accuracy-related and/or delinquency penalties. Unlike its predecessors, the 2012 OVDI is not set to expire on a specified date, but the IRS warns that the terms of the program could change or the program could end at any time. In addition, the standard penalty for participants has increased to 27.5% (2011 OVDI was 25%) of the sum of (i) the participant’s highest aggregate balance of foreign financial accounts and (ii) the value of other includable foreign assets.
US taxpayers with unreported offshore income should consult a tax professional to discuss the new program in detail. More information can also be found on the IRS website:http://www.irs.gov/newsroom/article/0,,id=252162,00.html?portlet=108Disclaimer: This blog and website are public sources of general information concerning our firm and its lawyers, as well as the information presented. They are intended, but not promised or guaranteed, to be correct, complete, and up-to-date as of the date posted. This blog and website are not intended to be, and are not, sources of legal opinion or advice. The materials, information, and communications on this blog and website do not apply to any particular person, entity, or situation, and do not apply to you or to your specific situation. You will need to consult with an attorney and/or other appropriate professional about your specific situation. Thank you.