The IRS recently ran a very successful amnesty program which ended October 15, 2009, for individuals who have been maintaining offshore accounts to avoid US taxation. The hope was that citizens would voluntarily come forward to report their accounts rather than the IRS having to track them down at significant taxpayer expense. As a result of the program, nearly 7,500 citizens and residents came forward to report their offshore accounts. The amnesty provided said individuals with an incentive for reporting any illegally hidden assets, including a significant reduction to any unpaid taxes and penalties, and the removal of criminal penalties and/or prison time.
Of the citizens/residents that voluntarily came forward, the dollar amounts associated with the hidden assets varied from accounts as small as $10,000, and as large as $100,000,000. The IRS did not estimate how much tax income would be generated as a result of the program, but they were very pleased with the program’s turn out.
The benefits of the program are not limited to the individuals who have come forth thus far. As the IRS has time to process these accounts and speak at length with the individuals, they are certain they will be able to identify additional offshore account holders who did not come forward. For example, CPAs, investment advisors and others who have participated in helping citizens to hide their money off shore. As these individuals are identified, more offshore accounts will be identified and the monies will become available for taxation.
Another benefit is that the taxpayer will now be in the system for each year from now forward. Depending upon the number of tax avoiders found during this amnesty program and the follow up searches, that could be a significant addition to the state and national tax rolls for years to come.
If you have an offshore account that is hiding income and did not sign up for the amnesty program, all is not lost. The IRS is considering extending the program but has not made a decision yet. Also, there are other programs available to help you mitigate the penalties involved. Contact us for assistance with bringing your offshore accounts into tax compliance.