Voluntary Disclosure Program: Contact the IRS Before They Get To You

FinanceTax

  • Author Kevin Thorn
  • Published February 2, 2010
  • Word count 571

The drop dead date to apply to the IRS Voluntary Disclosure Program was October 15th, however U.S. taxpayers still can file a voluntary disclosure under the IRS normal procedures.

In 2009, the IRS and U.S. Department of Justice commenced its highly publicized investigation into Swiss bank UBS AG and U.S. accountholders who failed to inform them of these assets. However, the investigation did not end with UBS. The IRS has made it very public that offshore tax evasion remains a top enforcement priority. The Department of Justice has gone after taxpayers regardless of the amount even taxpayers with assets of $20,000 or less in offshore accounts.

U.S. taxpayers with offshore assets and accounts are required to disclose these interests to the U.S. government on their Form 1040, U.S. Individual Tax Returns, and file a corresponding Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR). If IRS agents find out that a taxpayer has not disclosed an interest in an offshore account or income accruing on such accounts during the course of an audit, the IRS may impose harsh penalties including the greater of $100,000 or 50% of the offshore account balance for willful failure to file an FBAR for each account. These penalties, compounded with interest and fraud penalties, can essentially wipe out the taxpayers foreign assets. To make matters worse, taxpayers could be exposed to criminal prosecution and jail time for tax evasion.

In March 2009, to prod taxpayers to come forward and disclose previously undisclosed offshore accounts in exchange for minimal penalties and the promise not to refer the case for criminal prosecution, the IRS announced the creation of the IRS Voluntary Disclosure Program. As a result of pressure on UBS and other offshore institutions, thousands of U.S. taxpayers with previously undisclosed offshore accounts took advantage of the Voluntary Disclosure Program and joined before the October 15, 2009 deadline.

Despite the fact that it is too late to enter the IRS Voluntary Disclosure Program, the option to file a voluntary disclosure under the IRS normal procedures is still available. There are a plenty of advantages to filing a voluntary disclosure as it is far better to disclose to the IRS than to have the IRS discover you. As is with the Voluntary Disclosure Program, a traditional voluntary disclosure can provide taxpayers with previously undisclosed foreign accounts with a way out possibly avoiding the most severe of civil fines and criminal prosecution.

In addition, those U.S. taxpayers with undisclosed offshore bank accounts should be made very aware that the voluntary disclosure process is a comprehensive and delicate one as with all dealings involving the IRS. Extreme care must be taken in deciding on whether to file a voluntary disclosure or not. U.S. taxpayers are highly encouraged to get in touch with a tax attorney experienced in resolving disputes with the IRS as soon as possible.

For example, if a taxpayer has already been investigated and contacted by the IRS, it may be too late to file a disclosure. Therefore, time definitely plays a significant factor as the IRS continues its pursuit of undisclosed offshore account holders. The window of opportunity is closing on those who do not come forward and file to take advantage of possible reduced penalties and potential prison time. Again,it is advised that U.S. Taxpayers with undisclosed offshore accounts seek the advice of and direction of legal counsel on the matter.

To get more information on the Voluntary Disclosure Program or for assistance in participating in the program, please contact Kevin E. Thorn at the Thorn Law Group in Washington, D.C.

Article source: https://articlebiz.com
This article has been viewed 741 times.

Rate article

Article comments

There are no posted comments.

Related articles