The IRS has a special Voluntary Disclosure Program applicable to offshore accounts and entities that offers a uniform penalty structure for taxpayers who voluntarily come forward.Under the program, which began on March 23, 2009, taxpayers with undisclosed foreign accounts or entities can make a voluntary disclosure that enables them to become compliant, avoid substantial civil penalties, generally eliminate the risk of criminal prosecution and calculate, with a reasonable degree of certainty, the total cost of resolving all offshore tax issues.
Participating taxpayers must pay back-taxes and interest for six years and either an accuracy-related or delinquency penalty. Taxpayers will further be required to file amended returns (or original returns if no previous filing)which include an acknowledgement that the taxpayer has or had an offshore interest.
The deadline for this program has been extended and is now available until October 15, 2009. The IRS is aggressively seeking out taxpayers and advisors who are or were involved in undisclosed offshore activities. Several taxpayers and advisors have already been subjected to criminal prosecution, and many more will likely suffer the same fate.
If you think you might be at risk for criminal prosecution, or you have been involved in undisclosed offshore activities and want to avoid potential civil penalties, contact us immediately for further advice on how to proceed. All communications are held in the strictest of confidence.