Voluntary Disclosures Still Encouraged For U.S. Taxpayers With Offshore Accounts
Well, as they say, all good things must come to an end. Last month, the IRS Offshore Account Voluntary Disclosure Program (the “Program”) came to an end. According to IRS Commissioner Douglas Shulman, over 14,000 taxpayers chose to participate and take advantage of the Program’s terms.
But just because the time for entering the Program is over does not mean U.S. taxpayers with undisclosed foreign bank accounts should stay in hiding. In fact, the relative success of the Program makes it imperative for people with still undisclosed accounts to come forward and make a voluntary disclosure.
Because, thanks to the Program, the IRS has information on at least 70 banks that held undisclosed accounts for U.S. taxpayers. That means the IRS now has 70 banks to approach for information on other U.S. taxpayers they may have (allegedly) helped hide money from the IRS. None of these banks will want to go through the public relations turmoil UBS went through, so they are likely to cooperate – at least to some extent – with IRS or DOJ requests for information.
The same goes for tax professionals identified in statements given by Program participants. The IRS may demand tax professionals – accountants, lawyers, financial advisors, and the like – identify their clients.
So what should taxpayers with undisclosed foreign accounts do? Come forward and come clean to the IRS before someone else turns you in. Since the Program is over, we do not know for certain how the IRS will handle new disclosures as far as penalties go. Even if the penalties are higher than those promised by the Program, they are bound to be better than the penalties the IRS will impose against people they find still hiding.