Friday, December 10, 2010

IRS Considering Another Round of Voluntary Disclosure for Offshore Accounts

The IRS first round of voluntary disclosures for offshore financial accounts ended October 15, 2009  The IRS touts the results of that round as very successful.  Since the end of the program, additional taxpayers have made voluntary disclosures, basically under the same process but without any assurance of what the penalty regime would be.  Practitioners have been concerned that, without some certainty as to the penalty costs, many taxpayers with undisclosed foreign financial accounts will stay underground. 

According to this WSJ Article, Commissioner Shulman has indicated that the IRS is "seriously considering another special Voluntary Disclosure Program.  As expected, he said that the penalties would likely increase over the penalties available under the first program ending October 15, 2009.

There was no indication of what the treatment might be for those making a voluntary disclosure after October 15, 2009.  It seems to me that those coming in before the new program is announced should get a break as well -- perhaps the mid point between the penalties available under the first program and those available under the second.

1 comment:


    Above is a link to Mr. Shulman's speech referencing the anticipated new VDP. He seems to indicate that those who already "Got in line" post October 15, 2009 would get the same terms offered in the new initiative to those who are yet to step forward. My guess is it will be a 30% - 35% Fbar penalty and maybe a step up in the 20% accuracy penalty on the back taxes. One has to wonder if there will be more to follow as other governments have done in order to generate revenue. In an earlier interview a few weeks ago, Mr. Shulman indicated that only 10% of the 2009 Special Voluntary Disclosure cases have been settled. He also stated that the average case resulted in collections of $200k.


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