Offshore Voluntary Disclosure Revoked By The IRS

According to reports, the IRS revoked the Voluntary Disclosure Program for many U.S. taxpayers. This includes many U.S. taxpayers who hold accounts in Bank Leumi in Israel.

The IRS was not satisfied with merely investigating Switzerland; it has now expanded its net to include several more countries, including Israel, India, Hong Kong, and Singapore. Many taxpayers will recall that the IRS initiated a large-scale investigation led to the disclosure of UBS bank accounts. Individuals who had not disclosed their foreign accounts suddenly found themselves under the microscope of the Internal Revenue Service.

UBS was extensively fined and provided information regarding many offshore accounts that had been previously undisclosed. Wegelin Bank, the oldest bank in Switzerland, pled guilty to felony conspiracy to commit tax evasion, becoming the first Swiss bank to do so.

For U.S. taxpayers with undisclosed accounts, the IRS initiated a program in 2009 and 2011, the Offshore Voluntary Disclosure Program. This program allowed taxpayers to file amended returns and to pay penalties and interest without the threat of facing civil or criminal penalties. The program found success, with the government collecting over $4.4 billion in delinquent tax payments. Over 30,000 U.S. taxpayers participated in the collection. This particular program has ended, paving the way for a new program in 2012, to be explained in a subsequent blog post.

 

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