Disclosing Offshore Accounts
The Internal Revenue Service has implemented a new amnesty program for holders of undisclosed offshore accounts. They describe it as the “last and best chance” for individuals to avoid criminal prosecution and stiff penalties. As you may know, the IRS has stepped up its effort to force foreign banks (such as the Swiss bank UBS) and financial houses to disclose the names and account numbers of U.S. citizens. These regulations will only continue to become more stringent as the global war on terror and crime continues.
Without this amnesty program, the IRS promises to bring both civil penalties and criminal charges against taxpayers who in the past did not report their overseas holdings and the income earned by these accounts. The civil penalties are the harshest in the tax code. Taxpayers that the IRS considers to be willful tax evaders are subject to penalties that are even worse. Penalties can be as high as $100,000 or 50 percent of the principal value, whichever is greater. In addition to late payment penalties of up to 25 percent of the tax due and willful intent to defraud the IRS penalties of 75 percent of the tax due can also be levied. As stated before, criminal charges may also be filed.
The IRS has offered a new voluntary disclosure program, which allows a taxpayer to come forward and disclose the existence of foreign accounts and to amend their prior year tax returns from years 2003-2010. Taxpayers who are accepted into the program are generally able to avoid criminal prosecution and substantially reduce civil 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 August 31, 2011.
We at Connors and Sullivan Attorneys at Law, PLLC, can help you by applying to the program, gather the necessary documents, amend prior year tax returns and accompany you to all IRS interviews.