In a press release trumpeting the successful collection of more than $4.4 billion in its 2009 and 2011 voluntary disclosure programs, the IRS announced it is starting its third program designed to help people hiding offshore accounts get current with their taxes in the U.S. (IR-2012-5).
The new program, unlike the 2011 initiative, has no deadline to apply. However, the IRS emphasized that the terms of the new program could change in the future. The IRS stated that, for example, at any time the penalties under the program could be increased or the program could be ended entirely.
The new program handles penalties the same way the 2011 program did, except that the penalty on the highest aggregate account balance in the taxpayer’s foreign bank accounts during the years at issue is increased from 25% in the 2011 program to 27.5% in the new program. Individuals with offshore accounts or assets of less than $75,000 in any calendar year covered by the new initiative will qualify for a 12.5% penalty rate. Some taxpayers will qualify for a 5% rate, but only in narrow circumstances, including in the case of foreign residents who are unaware that they are U.S. citizens.
Also as in the 2011 program, participants must file all original and amended returns for the affected years and pay back taxes and interest for up to eight years and pay accuracy-related and/or delinquency penalties.
The IRS announced that it would update the frequently asked questions on its website addressing the 2011 program to reflect the new program.
—Sally P. Schreiber ( email@example.com ) is a JofA senior editor.
More from the JofA: