Home
IRS reopens offshore voluntary disclosure program with some changes
IRS has announced that it has reopened the offshore voluntary disclosure program (OVDP) with some changes. It also noted that it has collected over $4.4 billion under the two prior programs.
Background. The first OVDP was announced by IRS in 2009 and applied to those that voluntarily and timely disclosed unreported offshore income for 2003 - 2008. In February, 2011, IRS unveiled a second OVDP to give taxpayers with undisclosed income from hidden offshore accounts for the 2003 - 2010 period the chance to get current with their taxes. The 2011 OVDP was originally available through Aug. 31, 2011 but was extended through Sept. 9, 2011. It carried higher penalties than the original disclosure program but the penalties could be mitigated under certain circumstances.
New program. IRS says the new program is similar to last year's program in many ways. However, it stresses that there are a few key differences. Unlike last year, there is no set deadline under the new program to apply. IRS cautions, however, that it could change the terms of the program at any time. For example, it could increase penalties for all or some taxpayers or defined classes of taxpayers. In addition, it may end the program entirely at any point.
The overall penalty structure for the new program is the same for 2011, except for taxpayers in the highest penalty category. Under the new program, individuals must pay a penalty of 27.5% of the highest aggregate balance in foreign bank accounts/entities or value of foreign assets during the eight full tax years before the disclosure (up from 25%). As under the 2011 program, some taxpayers will be eligible for 5% or 12.5% penalties under the new program.
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% penalty, but taxpayers in limited situations may qualify for a 5% penalty. Smaller offshore accounts face a 12.5% penalty. People whose offshore accounts or assets did not surpass $75,000 in any calendar year covered by the new OVDP qualify for this lower rate. Taxpayers who feel that the penalty is disproportionate may opt instead to be examined.
IRS says more details will be available within the next month on its website. In addition, it will be updating key FAQs and providing additional specifics on the offshore program.
This is the right column content block. This is the right column content block. This is the right column content block. This is the right column content block. This is the right column content block.
This is the right column content block. This is the right column content block. This is the right column content block. This is the right column content block. This is the right column content block.
This is the right column content block. This is the right column content block. This is the right column content block. This is the right column content block. This is the right column content block.
This is the right column content block. This is the right column content block. This is the right column content block. This is the right column content block. This is the right column content block.