Article: IRS Announces New Offshore Voluntary Disclosure Initiative
By Lee Dodson
The Internal Revenue Service is continuing its push to rein in overseas income and assets of U.S. taxpayers through the 2011 Offshore Voluntary Disclosure Initiative (OVDI). Taxpayers are being encouraged to voluntarily divulge their undisclosed income and assets held overseas while incurring less severe penalties by doing so. The new voluntary disclosure will be available through August 31, 2011.
“As we continue to amass more information and pursue more people internationally, the risk to individuals hiding assets offshore is increasing,” said IRS Commissioner Doug Shulman. “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 new OVDI does not come without a cost. In contrast to the more lenient penalty framework in 2009, it will fine taxpayers for a quarter of the highest aggregate account balance in foreign bank accounts between years 2003-2010. Some individuals with smaller offshore accounts, that is, whose assets did not surpass $75,000 in any calendar year, may qualify for 5 or 12.5 percent penalties. Some may see these penalties as harsh, but, according to the IRS, failure to disclose offshore accounts and filing false tax returns are criminal offences that carry prison terms and fines up to $500,000.
The OVDI has three steps:
Specific forms that may apply include but are not limited to:
Taxpayers with foreign operations and interests should not automatically assume they need to file extra forms or even participate in the initiative. Contact a Decosimo professional today to discuss your options. A global reach with a local perspective, we are well experienced in the international arena having helped various businesses and individuals successfully navigate the global regulatory environment.