Lawyers on a Global situation

Lawyers on a Global situation

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U.S. taxpayers who failed to file disclosure forms were alerted by the U.S. Treasury on September 21, 2009 of a one-time extension of time to October 15, 2009 to comply with the special voluntary disclosure requirements of the Internal Revenue Service for Americans with unreported income from bank accounts situated outside the United States. As a result, after the deadline passed, many amnesty filings were made with the U.S. Treasury.
The total amount of tax, interest and penalties assessed and collected were so significant to the Treasury that another voluntary tax amnesty program and period would be offered with less favorable terms.According to the latest information from the U.S. Treasury, more than 15,000 amnesty filings were made on or before the 15th day of October 2009. The IRS and the IRS Commissioner, Douglas Shulman, disclosed that even after the above deadline, an additional 3,000 taxpayers came forward to be in compliance with America’s tax laws in relation to foreign bank accounts.
IRS Commissioner Shulman stated:
"As I've said all along, the goal is to get people back into the U.S. tax system. Combating international tax evasion is a top priority for the IRS. We have additional cases and banks under review. The situation will just get worse in the months ahead for those hiding assets and income offshore. This new disclosure initiative is the last, best chance for people to get back into the system.", "As we continue to amass more information and pursue more people internationally, the risk to individuals hiding assets offshore is increasing…This new effort gives those hiding money in foreign accounts a tough, fair way to resolve their tax problems once and for all. And it gives people a chance to come in before we find them."
The voluntary amnesty program will be termed the "2011 Offshore Voluntary Disclosure Initiative" (OVDI) and, from what I have seen to date, will incorporate many of the items of the 2009 amnesty, both good and bad. Taxpayers participating in the new initiative must also file all original and amended tax returns and include payment for taxes, interest and accuracy-related penalties by the Aug. 31 deadline.

Tax specialists may make reference to a particular tax rule and continue to state that the rule had so many exceptions that it was like "the tail wagging the dog."
1. The above 25% penalty may be reduced to 5% in very special situations;
2. If your offshore accounts (and assets!) are less than $75,000 in any tax year from 2003 through 2010, then that year will face a reduced penalty from 25% to 12.5%. However, the tax, interest and accuracy related penalties will still apply in full, please see immediately below on the interest and accuracy related penalty.OVDI has increased the penalty to 25% of the amount in the foreign bank accounts in the year with the highest aggregate account balance while looking at a 7-year period, from 2003 through 2010. This 25% penalty will apply to most filers of the OVDI amnesty. In addition, amnesty filers will be required to accept and pay back any and all taxes, interest and accuracy related penalties with a total payoff of these taxes, and interest and penalties on or before the August 31, 2011 deadline.
3. As mentioned in the 2009 amnesty, the IRS continues to solicit compliance with the threat of "possible" criminal prosecution for taxpayers who do not come forward in the 2011 amnesty offering.
4. The 2011 initiative offers clear benefits to encourage taxpayers to come in now rather than risk IRS detection. Taxpayers hiding assets offshore who do not come forward will face far higher penalty scenarios as well as the possibility of criminal prosecution.