The IRS recently announced that it has reopened its offshore voluntary disclosure program “to help people hiding offshore accounts get current with their taxes…following strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs.” The announcement stated that the “third offshore program comes as the IRS continues working on a wide range of international tax issues and follows ongoing efforts with the Justice Department to pursue criminal prosecution of international tax evasion.”
The specific provisions of the offshore voluntary disclosure program (“OVDP”) will be released by the IRS within a month. On its website, the IRS will update its Frequently Asked Questions about offshore accounts and provide specific details about the new program.
IRS Commissioner Doug Shulman released a few details about the OVDP, including the three-level penalty structure based on the highest foreign bank account/foreign asset value for the eight years prior to the disclosure times 5% (limited situations), 12.5% (smaller accounts), and 27.5% (for most accounts); and the need to file back tax returns for eight years and pay accuracy-related and/or delinquency penalties. The 27.5% penalty rate is up from the 20% and 25% rates used for the 2009 and 2011 programs, respectively. There is no specific deadline for submissions.
If you are considering applying for the reopened OVDP, contact your tax advisor as soon as possible to discuss whether participating in the OVDP makes sense based on your particular circumstances.