Take advantage of new IRS tax amnesty program, if you have overseas bank accounts.
The IRS is offering taxpayers a final chance to come forward and disclose income from bank accounts held offshore. The program, called the 2011 Offshore Voluntary Disclosure Initiative, gives taxpayers until August 31st, 2011 to come clean or risk serious consequences.
The 2011 Program follows a similar initiative from 2009 that resulted in over 17,000 disclosures from taxpayers. The rules for the current program are NOT identical to what was offered in 2009. The 2011 program charges a higher penalty rate than the 2009 program and has some different guidelines, too. IRS Commissioner Doug Shulman stated, “A new penalty framework that requires individuals to pay a penalty of 25 percent of the amount in the foreign bank accounts in the year with the highest aggregate account balance covering the 2003 to 2010 time period. Some taxpayers will be eligible for 5 or 12.5 percent penalties. Participants also must pay back-taxes and interest for up to eight years as well as paying accuracy-related and/or delinquency penalties.”
Over 3,000 of the 17,000 disclosures from the 2009 program were submitted after the original 2009 program deadline. The IRS is not going to accept any disclosures in 2011 that are past the August 31st deadline.
The main benefit to a taxpayer for participating in the 2011 program is to protect him or herself from aggressive collection efforts, growing penalties, and potential criminal prosecution. The voluntary program gives the taxpayer a way to resolve the problem ”before we (the IRS) find them,” said Shulman. “Tax secrecy continues to erode,” Shulman said. “We are not letting up on international tax issues, and more is in the works. For those hiding cash or assets offshore, the time to come in is now. The risk of being caught will only increase.”
Taxpayers can visit the IRS Web site to view the full terms and conditions of the 2011 Offshore Voluntary Disclosure Initiative. Information there includes an extensive set of questions and answers to help taxpayers and tax professionals. The web site also includes details on how taxpayers can make a voluntary disclosure.