To disclose offshore assets or not to disclose? 34,500 taxpayers have chosen to disclose under the current and previous Offshore Voluntary Disclosure Program (OVDP) but many are still struggling with the decision.
Collecting revenues from undeclared offshore accounts remains a top priority for the Internal Revenue Service (IRS). “We continue to make strong progress in our international compliance efforts that help ensure honest taxpayers are not footing the bill for those hiding assets offshore,” said IRS Commissioner Doug Shulman.
Closing the Loopholes
Under existing law, if a taxpayer challenges in a foreign court the disclosure of tax information by that government, the taxpayer is required to notify the U.S. Justice Department of the appeal.
The IRS said that if the taxpayer fails to comply with this law and does not notify the U.S. Justice Department of the foreign appeal, the taxpayer will no longer be eligible for the Offshore Voluntary Disclosure Program (OVDP).
The IRS also put taxpayers on notice that their eligibility for OVDP could be terminated once the U.S. government has taken action in connection with their specific financial institution.
The current OVDP, which was announced in January 2012, will be open for indefinite period until otherwise announced. The program is similar to the 2011 program in many ways, but with a few key differences:
- there is no set deadline for people to apply
- terms of the program could change at any time
- the offshore penalty has been raised to 27.5 percent from 25 percent in the 2011 program
- reduced penalty categories of 5 percent and 12.5 percent are still available
For more information on OVDP and disclosing offshore accounts, see the questions and answers from the IRS or contact a tax attorney.