After collecting more than $4 billion over the past 3 years from taxpayers with unreported overseas accounts, the IRS is giving taxpayers yet another opportunity to come clean. It’s called the OVDI.
Due to the successful initiatives in 2009 and 2011 that allowed Americans with foreign accounts to report them and avoid criminal prosecution, the IRS announced that it was reopening its Offshore Voluntary Disclosure Program indefinitely.
The program allows those with hidden accounts to report them and become current with the IRS. While you can avoid criminal prosecution, the 2012 program will see a slightly higher penalty. 27.5 percent of the highest aggregate balance in foreign bank accounts, for one. Or, value of foreign assets during the eight full tax years prior to the disclosure.
That penalty rises from the 25 percent figure used for the 2011 program. With the help of a tax attorney, you may face a penalty of 5 or 12.5 percent instead. In all, more than 33,000 taxpayers took advantage of the IRS’ forgiving nature and several hundred people filed after the 2011 initiative expired.
The ability to hide your money overseas is coming to an end. The United States is entering into, or already has, tax treaties with multiple tax haven countries. And even Swiss banks – long known for their secrecy – are coming closer to fulfilling Uncle Sam’s demand. The U.S. wants these banks to turn over the names of its American customers.
The IRS is becoming more aggressive, and more forgiving, in its effort to collect more taxes from more taxpayers. If you’re one of the millions of taxpayers who owe back tax debt through unreported foreign income or assets, make sure to hire a tax attorney so you can fight for a fair outcome.
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