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Time to Disclose Offshore Accounts Before IRS ups its Penalties?

In a speech before the George Washington University-IRS institute on international taxation earlier this month, Internal Revenue Service Commissioner Douglas Shulman announced that the IRS is "seriously considering" another voluntary offshore account disclosure program. Approximately 15,000 people made voluntary disclosures under the original voluntary disclosure program and another 3,000 people have informed the IRS of offshore accounts since the program ended.

Shulman has made cracking down on offshore tax havens a priority. His strategy has been to leverage and mine information the IRS already has on offshore accounts to find more still more offshore accounts. This has amounted to a very large and sprawling probe into foreign accounts held by American taxpayers and corporations.

Shulman declared the importance of collecting revenue that should have been paid in the past, but he also stressed the importance of bringing taxpayers back into the tax system so that they pay their future taxes. Based on data the IRS has mined from previous voluntary disclosures and on information obtained by Swiss bank UBS, the IRS is consolidating prior leads involving numerous banks and accounts throughout the world.

Because of the success of the original program, the IRS is considering a new voluntary disclosure program. However, Shulman cautions that people who participate in this program will not get the same deal as the original program offered.

Shulman declared that while the UBS and voluntary disclosure programs are a significant portion of his overall strategy, there is still more to come. One of the biggest projects the IRS is presently working on is the implementation of the Foreign Account Tax Compliance Act (FATCA), which was passed earlier this year. In our next post, we will go into more detail on FATCA and the commissioner's plans to broaden the IRS investigation into offshore assets.

Sources:

IRS.gov, "Prepared Remarks of IRS Commissioner Doug Shulman before the 23RD Annual Institute on Current Issues in International Taxation, Washington, DC," IR-2010-122, 12/9/2010

Federal Tax Day (CCH), "IRS Considering Another Offshore Voluntary Disclosure Program, Shulman Says," Brant Goldwyn, 12/10/2010

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