IRS Extends Offshore Amnesty Program Deadline to October 15
On September 21, 2009, the IRS announced that it extended the deadline until October 15, 2009 for U.S. taxpayers with previously undisclosed offshore accounts to come forward and participate in theIRS Offshore Settlement Initiative Program. This means U.S. taxpayers with accounts in foreign bank accounts now have just over 3 weeks to make a voluntary disclosure of their accounts to the IRS or risk facing increased monetary penalties—which can exceed the value of the account—and potential criminal prosecution.
DC tax attorney Kevin Thorn of Thorn Law Group, PLLC said the extension is welcome, but cautions taxpayers should not wait another three weeks to decide to come forward. Thorn reports that the process of working with the IRS’s Criminal Investigation division to get clients compliant with reporting and past tax liabilities has been smooth so far, but many clients are having trouble getting bank statements to submit a complete disclosure.
In March 2009, the IRS announced the creation of the Initiative to encourage taxpayers to come forward and disclose previously undisclosed offshore accounts in exchange for reduced penalties and no criminal sanctions. The Initiative received a lot of attention due to the U.S.-Swiss Settlement Agreement whereby Swiss authorities agreed to provide the IRS with the identities of 4,450 U.S. taxpayers with undisclosed accounts in Swiss banking giant UBS AG. However, as Thorn emphasizes, the scope of the Initiative is much broader than UBS. U.S. taxpayers with undisclosed accounts in other foreign banks are also eligible and encouraged to participate in the Initiative.
In fact, Thorn advises people with undisclosed offshore bank accounts to seriously consider coming forward as soon as possible, regardless of which bank the account is in. Although there has been plenty of media coverage surrounding UBS accounts, taxpayers with accounts in other offshore banks are just now realizing their potential tax liability. Thorn finds this is not surprising given the recent string of countries once considered “tax havens” now entering formal agreements to share taxpayer information with the U.S. government.
The IRS initially gave taxpayers 6 months—or until September 23rd—to participate in the Initiative but granted a one-time extension of 22 days—or until October 15th—to complete their submissions. As the New York Times reported, the IRS was swamped with applications into the program, receiving more than 3,000 applications. Additionally, the IRS recognized the complexity of the voluntary disclosure process and granted additional time for taxpayers to gather financial documentation and prepare their voluntary disclosure submissions and paperwork.
The benefits of the Initiative are only available to taxpayers who come forward and make a voluntary disclosure of their offshore or foreign accounts by October 15, 2009. The IRS has made clear that no more extensions will be granted. Time may be running out for offshore tax evaders but the Initiative may provide U.S. taxpayers with a way out.
For additional information, contact Kevin E. Thorn or visit www.thorntaxlaw.com.