IRS has announced it’s new tax program for Offshore Bank Accounts.
After finding a goldmine in Offshore Accounts the IRS will continue to ramp up it’s program.
Here is how the process and the new program will work.
The overall penalty structure for the new program is the same for 2011, except for taxpayers in the highest penalty category. Off course IRS must modify the program.
For the new program, the penalty framework requires individuals to pay a penalty of 27.5 percent of the highest aggregate balance in foreign bank accounts/entities or value of foreign assets during the eight full tax years prior to the disclosure.
That is up from 25 percent in the 2011 offshore program. Some taxpayers will be eligible for 5 or 12.5 percent penalties; these remain the same in the new program as in 2011.
Participants must file all original and amended tax returns and include payment for back-taxes and interest for up to eight years as well as paying accuracy-related and/or delinquency penalties.
Participants face a 27.5 percent penalty, but taxpayers in limited situations can qualify for a 5 percent penalty. Smaller offshore accounts will face a 12.5 percent penalty.
People whose offshore accounts or assets did not surpass $75,000 in any calendar year covered by the new will qualify for this lower rate.
As under the prior programs, taxpayers who feel that the penalty is disproportionate may opt instead to be examined. Use caution here.
The IRS recognizes that its success in offshore enforcement and in the disclosure programs has raised awareness related to tax filing obligations. This includes awareness by dual citizens and others who may be delinquent in filing, but owe no U.S. tax. The IRS is currently developing procedures by which these taxpayers may come into compliance with U.S. tax law. The IRS is also committed to educating all taxpayers so that they understand their U.S. tax responsibilities.
IRS has also been very active with Criminal Division investigations as a result of this landmark program. This will always be a huge IRS program for the years to come.
