IR-2012-5, Jan. 9, 2012
WASHINGTON — The Internal Revenue Service today reopened the offshore
voluntary disclosure program to help people hiding offshore accounts
get current with their taxes and announced the collection of more than
$4.4 billion so far from the two previous international programs.
The IRS reopened the Offshore Voluntary Disclosure Program (OVDP)
following continued strong interest from taxpayers and tax practitioners
after the closure of the 2011 and 2009 programs. The third offshore
program comes as the IRS continues working on a wide range of
international tax issues and follows ongoing efforts with the Justice
Department to pursue criminal prosecution of international tax evasion.
This program 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 program makes good sense for taxpayers still
hiding assets overseas and for the nation’s tax system.”
The program is similar to the 2011 program in many ways, but with a
few key differences. Unlike last year, there is no set deadline for
people to apply. However, the terms of the program could change at any
time going forward. For example, the IRS may increase penalties in the
program for all or some taxpayers or defined classes of taxpayers – or
decide to end the program entirely at any point.
“As we’ve said all along, people need to come in and get right with
us before we find you,” Shulman said. “We are following more leads and
the risk for people who do not come in continues to increase.”
The third offshore effort comes as Shulman also announced today the
IRS has collected $3.4 billion so far from people who participated in
the 2009 offshore program, reflecting closures of about 95 percent of
the cases from the 2009 program. On top of that, the IRS has collected
an additional $1 billion from up front payments required under the 2011
program. That number will grow as the IRS processes the 2011 cases.
In all, the IRS has seen 33,000 voluntary disclosures from the 2009
and 2011 offshore initiatives. Since the 2011 program closed last
September, hundreds of taxpayers have come forward to make voluntary
disclosures. Those who have come in since the 2011 program closed last
year will be able to be treated under the provisions of the new OVDP
program.
The overall penalty structure for the new program is the same for 2011, except for taxpayers in the highest penalty category.
For the new program, the penalty framework requires individuals to
pay a penalty of 27.5 percent of the highest aggregate balance in
foreign bank accounts/entities or value of foreign assets during the
eight full tax years prior to the disclosure. That is up from 25 percent
in the 2011 program. Some taxpayers will be eligible for 5 or 12.5
percent penalties; these remain the same in the new program 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.
Participants face a 27.5 percent penalty, but taxpayers in limited
situations can qualify for a 5 percent penalty. Smaller offshore
accounts will face a 12.5 percent penalty. People whose offshore
accounts or assets did not surpass $75,000 in any calendar year covered
by the new OVDP will qualify for this lower rate. As under the prior
programs, taxpayers who feel that the penalty is disproportionate may
opt instead to be examined.
The IRS recognizes that its success in offshore enforcement and in
the disclosure programs has raised awareness related to tax filing
obligations. This includes awareness by dual citizens and others who
may be delinquent in filing, but owe no U.S. tax. The IRS is currently
developing procedures by which these taxpayers may come into compliance
with U.S. tax law. The IRS is also committed to educating all taxpayers
so that they understand their U.S. tax responsibilities.
More details will be available within the next month on IRS.gov. In
addition, the IRS will be updating key Frequently Asked Questions and
providing additional specifics on the offshore program.
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