Got undisclosed offshore accounts? IRS offers chance to make things right
by Lu-Ann Dominguez on February 02, 2012
People need to come in and get right with us before we find you.
We are following more leads and the risk for people who do not come in
continues to increase.
– Commissioner of Internal Revenue Douglas H. Shulman
The Offshore Voluntary Disclosure Program is being implemented for a third time in 2012, the IRS announced in January. The program may be useful for those who have undisclosed foreign accounts or assets.
Under the 2012 OVDP, taxpayers who voluntarily come forward and report their previously undisclosed foreign accounts and assets will be excused from criminal prosecution. The 2012 OVDP is similar to previous voluntary disclosure programs that ended in 2011 and in 2009 and accepted 33,000 taxpayers.
Keep in mind that the 2012 OVDP requires individuals to pay a penalty of 27.5 percent of the highest aggregate balance or value of foreign assets in the eight years prior to the disclosure. This penalty is slightly higher than the 25% penalty required in the 2011 program and the 20% penalty required in the 2009 program. Some taxpayers may be eligible for 5% and 12.5% penalties.
Also, 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.
Those who have undisclosed accounts or assets but don’t participate in the 2012 OVDP should be aware that the Department of Justice recently successfully prosecuted individuals with undisclosed offshore accounts.
In 2011, for example, two South Florida real estate developers received 10-year prison terms for filing false tax returns. The IRS alleged the defendants used shell corporations in the Bahamas, the British Virgin Islands, Panama, Liechtenstein, and Switzerland to seek to conceal their assets and income from the IRS.
Read more about author Lu-Ann Dominguez
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