I.R.S. Offers New Amnesty Deal for Offshore Accounts
The Internal Revenue Service announced a new initiative on Tuesday intended to lure tax evaders, but with stiffer penalties than those offered by a previous program.
Under the initiative, Americans with hidden offshore accounts have until Aug. 31 to come forward voluntarily and report the accounts to the I.R.S. in exchange for penalties that, while below what they would ordinarily pay, are still higher than those offered in an earlier amnesty program.
Tax and criminal defense lawyers had been speculating about a possible new program after recent statements by I.R.S. officials, including the commissioner, Douglas H. Shulman. The agency created the latest program amid a widening crackdown by federal authorities on offshore accounts sold to wealthy Americans.
The program makes clear that Americans who come forward will not to face prosecution for tax evasion ? something tax lawyers say was more of an open question under the previous program.
?When a taxpayer truthfully, timely and completely complies with all provisions of the voluntary disclosure practice, the I.R.S will not recommend criminal prosecution to the Department of Justice,? the I.R.S. said.
The program requires individuals to pay a penalty of 25 percent of the amount in their foreign bank accounts in the year with the highest aggregate account balance over eight years from 2003 through 2010. Normally, a taxpayer would pay 50 percent of the highest amount in each account for each year over six years.
Some taxpayers may be eligible for reduced penalties of 5 percent or 12.5 percent. Anyone entering the program must also pay back taxes and interest for up to eight years, as well as delinquency and accuracy-related penalties.
The program is tougher than one created in 2009, which attracted some 15,000 Americans with hidden accounts overseas. Some 3,000 additional Americans had come forward since the October 2009 deadline of the previous program.
?The overall penalty structure for 2011 is higher, meaning that people who did not come in through the 2009 voluntary disclosure program will not be rewarded for waiting,? the I.R.S. said in a written statement.
Americans with smaller offshore accounts holding no more than $75,000 in any year covered by the program are eligible for a penalty category of 12.5 percent.
Under the previous program, taxpayers who came forward before Oct. 15, 2009, were subject to a reduced penalty of 5 or 20 percent, depending in part on whether their wealth had been inherited. They were also penalized once, on the highest balance in their affected accounts over the previous six years, instead of a penalty for each of the six years. In the earlier program, the high level of a single year could have left account holders owing more in taxes than remained in the account.
Without the terms of either program, those who come forward can be left owing the I.R.S. a multiple of what their account holds.
Source: http://feeds.nytimes.com/click.phdo?i=81ba7dcfc649d0fd7e7f962a84df6390
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