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February 18, 2011

IRS Announces Continuation of Offshore Voluntary Disclosure Initiative

Guest Author: Patrick Moro, Columbus, Ohio

    In a release dated February 8, 2011, the IRS announced its plan to bring back the Offshore Voluntary Disclosure Initiative or “OVDI”.  The OVDI is a temporary program created in 2009.  The program affects those taxpayers that collect income from undisclosed foreign bank and financial accounts by extending to them an opportunity to mitigate potential criminal and civil charges.  In return for voluntarily disclosing the foreign accounts, income derived from those accounts, and paying fines, the IRS will not recommend criminal prosecution so long as the taxpayer complies with its requests.

    The Internal Revenue Code requires taxpayers with offshore bank and financial accounts to file a Report of Foreign Bank & Financial Account or “FBAR”.  The problem is that the majority of these taxpayers fail to report them. For years, foreign accounts have been attractive mechanisms for hiding taxable income from the IRS.  The foreign banks have an interest in not disclosing these customers because they are typically higher net worth clients however; these protections are beginning to disappear as many countries are entering into disclosure agreements with the U.S.

    The program is available to individual taxpayers and entities with a few exceptions.  For example, those taxpayers already under examination are not permitted to participate.  The organization of the program is straightforward and differs slightly from the 2009 initiative. Major changes include a different penalty structure and inclusion of the years 2003 through 2010. 

    The IRS encouraged noncompliant taxpayers to step forward and participate in the program.  IRS Commissioner Dough Schulman was quoted as saying:  “We are not letting up on international tax issues, and more is in the works. For those hiding cash or assets offshore, the time to come in is now. The risk of being caught will only increase.”  The program is set to run through August 31, 2011 notwithstanding certain circumstances which are subject to special filing dates. 

    For more information on the 2011 Offshore Voluntary Disclosure Initiative, please see:

http://www.irs.gov/newsroom/article/0,,id=235695,00.html

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ClubPenguinCheats

The problem is that the majority of these taxpayers fail to report them. For years, foreign accounts have been attractive mechanisms for hiding taxable income from the IRS.

The comments to this entry are closed.

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February 18, 2011

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ClubPenguinCheats

The problem is that the majority of these taxpayers fail to report them. For years, foreign accounts have been attractive mechanisms for hiding taxable income from the IRS.

The comments to this entry are closed.

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