The Internal Revenue Service has reopened the offshore voluntary disclosure programme for delinquent US taxpayers to declare their hidden offshore funds and avoid criminal prosecution for international tax evasion. The IRS states in a news release that the previous two disclosure programmes brought in a combined US$4.4 billion, and that the current programme “will be open for an indefinite period until otherwise announced”.
“Our focus on offshore tax evasion continues to produce strong, substantial results for the nation’s taxpayers,” said IRS Commissioner Doug Shulman. “We have billions of dollars in hand from our previous efforts, and we have more people wanting to come in and get right with the government. This new programme makes good sense for taxpayers still hiding assets overseas and for the nation’s tax system.”
The IRS collected US$3.4 billion from the 2009 programme, with about 95 per cent of those cases closed, plus US$1 billion so far from the 2011 programme. The IRS expects that number to grow as more cases are processed.
The 2012 programme is similar to the 2011 programme, except, for example, that this year’s programme has no set deadline for people to apply. However, the terms of the new programme could change at any time, including increased penalties for some or all taxpayers, or the termination of the programme.
In total, the IRS reports seeing 33,000 voluntary disclosures from the first two programmes, the latter of which closed in September.
The penalty structure for the 2012 programme is the same for 2011, except for taxpayers in the highest penalty category. For the 2012 programme, individuals whose offshore accounts or assets exceeded US$75,000 in the past eight years must pay a 27.5 per cent penalty on the highest aggregate balance of those accounts or assets – up from 25 per cent in the 2011 programme. Other taxpayers may be eligible for 5 or 12.5 percent penalties, the same as in 2011.
Participants must file all original and amended tax returns and include payment for back-taxes and interest for up to eight years as well as paying accuracy-related and/or delinquency penalties.
The IRS is developing procedures to deal with dual citizens and others who may be delinquent in filing tax documents, but owe no US taxes. The IRS will make more details available within the next month, and will be updating its key Frequently Asked Questions on the IRS website.
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