Voluntary Disclosure Program – U.s. Taxpayers Can Still File

The drop dead date to apply to the IRS Voluntary Disclosure Program came and went, however U. S. taxpayers still can file a voluntary disclosure under the IRS regular procedures. In 2009, the IRS and U. S. Department of Justice launched a highly publicized investigation into Swiss bank UBS AG and U. S. accountholders who failed to disclose these assets to the U. S. Government. However, the investigation did not end with UBS. It is clear that offshore tax evasion remains a top IRS enforcement priority. The Department of Justice has gone after taxpayers regardless of their assets?even those 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 discover that a taxpayer has not reported an interest in an offshore account or income accruing on such accounts during the course of an audit, the IRS may impose steep 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 taxpayer’s foreign assets. Additionally, taxpayers could be subject to criminal prosecution and jail time for tax evasion. In March 2009, the IRS announced the creation of the IRS Voluntary Disclosure Program to encourage taxpayers to come forward and disclose previously undisclosed offshore accounts in exchange for reduced penalties and the promise not to refer the case for criminal prosecution. As a result of pressure on UBS and other offshore banks, thousands of U. S. taxpayers with previously undisclosed offshore accounts sought amnesty in the Voluntary Disclosure Program and applied before the October 15, 2009 deadline. While it may be too late to apply to the IRS Voluntary Disclosure Program, it is not too late to file a voluntary disclosure under the IRS’s normal procedures. There are a number of advantages to filing a voluntary disclosure as it is far better to disclose to the IRS than to have the IRS discover you. Like the Voluntary Disclosure Program, a traditional voluntary disclosure provides taxpayers with previously undisclosed foreign accounts with a way out?potentially avoiding the most severe civil penalties and criminal prosecution. However, care must be taken in determining whether to file a voluntary disclosure with the IRS. For example, if a taxpayer has already been investigated and contacted by the IRS, it may be too late to file a disclosure. The voluntary disclosure process is complex and sensitive, thus, taxpayers are best served by contacting a tax attorney who is skilled at resolving disputes with the IRS as soon as possible.

Tags: Disclosure, File, Program, Still, Taxpayers, U.S., Voluntary

This entry was posted on Saturday, December 26th, 2009 at 10:47 am and is filed under Article. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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