Offshore Account Reporting - Voluntary Compliance Deadline
August 10, 2011
Terry Peltz, Director
Performance Advisors LLC
The 2011 Offshore Voluntary Disclosure Initiative (OVDI), designed to help taxpayers hiding income in offshore accounts make their taxes current with the IRS, will expire on August 31, 2011. Taxpayers coming forward voluntarily will experience a less stringent penalty than those who wait for the IRS to discover their undisclosed accounts and income. With new reporting requirements being initiated over the next few years, taxpayers will find it increasingly more difficult to hide income in offshore accounts.
IRS Commissioner Doug Shulman explained, “The time has come to get back into compliance with the U.S. tax system, because the risks of hiding money offshore keeps going up. Our goal is to get people back into the system. The second voluntary initiative gives people a fair way to resolve their tax problems.”
Originally announced on February 8th, the 2011 OVDI Offshore Disclosure Program (OVDP) is similar to the one initiated in 2009, offering benefits that encourage taxpayers to disclose their offshore accounts and incomes rather than face higher penalties and possible criminal charges. In the 2011 initiative, taxpayers will have to pay a 25% penalty on the amount hidden in foreign accounts in the year with “the highest aggregate account balance covering the 2003 to 2010 time period.” Penalties may be lower for eligible taxpayers.
Those who choose to comply must also pay back-taxes and interest for up to eight years and well as other possible penalties. In order to be eligible for OVDI, original and amended returns must be filed by August 31, 2011.
For more information, on offshore accounts or any other tax subject, refer to your trusted tax advisor, or visit IRS.gov.
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