Taxpayers with hidden cash get chance to come clean

(CNS): Taxpayers in the US are being given another chance to come clean about money in offshore accounts without running the risk of being prosecuted. The Internal Revenue Service said yesterday that under a special voluntary disclosure initiative designed to bring offshore money back into the country’s tax system people with undisclosed income from hidden offshore accounts were being offered a fair opportunity to get current with their taxes. The new voluntary disclosure initiative will be available until the end of August this year. The first disclosure programme closed with 15,000 people coming forward in 2009 the US tax office stated but since then some 3,000 taxpayers have come forward with bank accounts from around the world.

These taxpayers will also be eligible to take advantage of the special provisions of the new initiative.
“As we continue to amass more information and pursue more people internationally, the risk to individuals hiding assets offshore is increasing,” said IRS Commissioner Doug Shulman. “This new effort gives those hiding money in foreign accounts a tough, fair way to resolve their tax problems once and for all. And it gives people a chance to come in before we find them.”

He added that the goal is to get people back into the US tax system and that combating international tax evasion was a priority for the IRS.

“We have additional cases and banks under review. The situation will just get worse in the months ahead for those hiding assets and income offshore. This new disclosure initiative is the last, best chance for people to get back into the system,” the commissioner said in an official government release.

The 2011 Offshore Voluntary Disclosure Initiative (OVDI) includes several changes from the 2009 programme. The overall penalty structure for 2011 is higher which means people who did not come in through the 2009 voluntary disclosure program will not be rewarded for waiting.

There is a new penalty framework thatrequires individuals to pay 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.
Taxpayers participating in the new initiative must file all original and amended tax returns and include payment for taxes, interest and accuracy-related penalties by the 31 August deadline.

The IRS is also making other modifications to the 2011 disclosure initiative. Participants face a 25 percent penalty, but taxpayers in limited situations can qualify for a 5 percent penalty.
The IRS also created a new penalty category of 12.5 percent for treating smaller offshore accounts. People whose offshore accounts or assets did not surpass $75,000 in any calendar year covered by the 2011 initiative will qualify for this lower rate.
The 2011 initiative offers benefits to encourage taxpayers to come in now rather than risk IRS detection. Taxpayers hiding assets offshore who do not come forward will face far higher penalty scenarios as well as the possibility of criminal prosecution.

“This is a fair offer for people with offshore accounts who want to get right with the nation’s taxpayers,” Shulman said. “This initiative offers them the chance to get certainty about how their case will be handled. Just as importantly, those who truly come in voluntarily can avoid criminal prosecution as well.”
The IRS will also launch a new section on www.IRS.gov that includes the full terms and conditions on the 2011 Offshore Voluntary Disclosure Initiative, including an extensive set of questions and answers to help taxpayers and tax professionals. The web site also includes details on how people can make a voluntary disclosure.

Shulman said IRS efforts in the international arena will only increase as time goes on.

“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.”