From Bloomberg, Personal Finance, (Feb 8, 2011) “IRS Announces Amnesty To Declare Offshore Accounts”
Tax avoidance is a legitimate undertaking, no one is obliged to pay more in taxes than they legally owe. But as Al Capone discovered, the difference between tax avoidance and tax evasion is the thickness of a prison wall. Hiding assets in off-shore bank accounts in order to evade taxation is an increasingly risky business. The U.S. government is stepping up efforts to crack down on offshore accounts and tax evasion. In fact, the IRS is urging taxpayers to disclose their accounts now, before new reporting requirements for overseas banks and changes to tax treaties give the government more information it can use to refer criminal cases to the Department of Justice. The new disclosure requirements go into effect in 2013.
Bloomberg recently reported the IRS has announced a period of amnesty for those that come forward to admit their offshore accounts. They will have to pay the taxes, fees, and penalties, but if they step forward now, they can avoid criminal prosecution.
This type of amnesty program is the second and purportedly the last chance to enter back into the system. A similar program ended in October 2009, with about 15,000 taxpayers avoiding prosecution by paying taxes on undeclared income and a 20 percent penalty. Even though only the first 2,000 have been processed the move has already generated $400 million in revenue.
The new program is not as generous, and carries a 25 percent penalty. “People who waited out the 2009 initiative will not be rewarded for waiting,” said IRS Commissioner Douglas Shulman.
The new voluntary disclosure program expires August. 31st.