IRS offers third amnesty program for offshore tax evaders

The IRS has announced that it will offer a program for tax evaders hiding money offshore to come clean and avoid jail time in 2012. Similar programs offered in 2009 and 2011 netted the government $4.4 billion in tax collections.

To date, 33,000 taxpayers come clean

The IRS said Monday that 33,000 taxpayers have come forward so far to disclose money hidden in offshore accounts. The agency collected $3.4 billion in 2009 because of the voluntary disclosure program. The 2011 offer has netted $1 billion so far. That figure is expected to rise as cases continue to be processed.

Bolstered by the continuing success of the first two programs, the IRS said that it will be making a similar offer to tax evaders in 2012.

IRS Commissioner Doug Shulman said:

“Our focus on offshore tax evasion continues to produce strong, substantial results for the nation’s taxpayers. We have billions of dollars in hand from our previous efforts, and we have more people wanting to come in and get right with the government.”

No deadline for new program

The previous programs had a specific deadline by which tax evaders had to come forward. The 2012 program has no designated deadline. However, the IRS said that it could end the deal or change its terms at any time, so expediency is definitely encouraged.

[IRS at your door? Perhaps a short term installment loan could help.]

As of this time, those who disclose offshore accounts are levied a penalty of 27.5 percent of the highest aggregate balance in the accounts for the eight years previous to the disclosure. The penalty was 25 percent in 2011.

Jail time and stiff penalties of 50 percent or more could face taxpayers who are caught by the IRS with undisclosed accounts.

Evasion increasingly difficult

Escaping prosecution has become increasingly difficult for tax evaders. In 2009, UBS, a prominent Swiss financial institution headquartered in Zurich, paid the U.S. $780 million to settle tax evasion prosecution. The financial records of 4,450 American UBS clients were handed over to Washington, effectively puncturing the laws protecting Swiss bank secrecy. Since then, similar probes have come from Germany, Italy and Britain.

FACTA

The Foreign Account Tax Compliance Act (FACTA) was adopted by the U.S. in March of 2010 to prevent Americans from evading taxes by hiding assets in offshore bank accounts. The FACTA forces non-U.S. banks to disclose information regarding accounts held by citizens of the U.S.

Millionaires under scrutiny

Stepping up its effort to crack down on offshore tax cheats, the IRS has been auditing more and more millionaires. The IRS says that it audited one in every eight millionaires in 2011, and that effort will continue in 2012.

Sources

MSNBC
Chicago Tribune
CNN