The Internal Revenue Service announced today that it is bringing back an amnesty program for tax cheats who have hidden funds in offshore accounts.
The IRS offered amnesty programs to offshore account holders in 2009 and 2010 and collected more than $4.4 billion in taxes from 33,000 tax evaders who’d had a change of heart – or simply lost their nerve.
"Our focus on offshore tax evasion continues to produce strong, substantial results for the nation's taxpayers," IRS Commissioner Doug Shulman said, according to CNN. "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.”
According to CNN:
Unlike the past two initiatives, this year's program doesn't have a set deadline by which taxpayers must turn themselves in. But the IRS said it can change the terms of the program at any time, which could mean closing it altogether or increasing penalties.
The new program operates in the same way as the previous IRS amnesty programs, MarketWatch reported. Tax evaders who voluntarily disclose assets they have stored in overseas accounts will not be prosecuted and will pay lower penalties than if the government had found them, MarketWatch reported. They must also name the banks and advisers that helped them get around U.S. tax laws, Bloomberg News reported.
Taxpayers with more than $75,000 stashed abroad will pay a penalty of 27.5 percent of the highest aggregate balance in their offshore accounts in the previous eight years, plus back taxes and interest, MarketWatch reported. If they’ve hidden less than $75,000 overseas, they’ll pay a smaller penalty equal to 12.5 percent or 5 percent of their highest aggregate balance, depending on the circumstances of their case.
If the IRS catches a taxpayer with undeclared assets in foreign accounts, they face penalties of 50 percent or more of the total account balance and could end up in jail, CNN reported.
"This signals that the IRS is anticipating a wave of increased enforcement," Jeffrey Neiman, a former federal prosecutor now in private practice, told Reuters. "By reopening the program, the IRS is giving Americans with overseas accounts a vehicle to avoid criminal prosecution."
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