The new amnesty, which had been alluded to as long ago as last November, offers tax evaders more onerous penalties than a previous scheme, but does not carry a threat of prosecution, if taxpayers come forward by 31 Aug.
“The risk to individuals hiding assets offshore is clearly increasing,” IRS commissioner Douglas Shulman said during a conference call, according to the New York Times.
In a statement on the IRS’s website, Shulman said the new effort, which is being called the 2011 Offshore Voluntary Disclosure Initiative, or OVDI, "gives those hiding money in foreign accounts a tough, fair way to resolve their tax problems once and for all. And it gives people a chance to come in before we find them."
Under the OVDI, American taxpayers with undeclared assets in offshore accounts must come forward by 31 Aug, and complete a raft of forms seeking information the source of their offshore monies as well as details of the institutions in which they are being held, and even the names of anyone who may have advised them to keep them there.
Those who do will no longer be at risk of being pursued by the IRS for their unpaid taxes, with the threat of criminal punishment; but they will have to pay the taxes and interest they owe, dating back to 2003, as well as a 25% penalty, which would be based on the maximum amount they held in these undeclared accounts at any point during the 2003 – 2010 period.
For those with accounts of less than $75,000 in the aggregate, a 12.5% penalty is available.
The scheme follows an earlier disclosure initiative, which ended in October 2009, and which was less onerous. It comes as the US continues to make headlines with its pursuit of Americans it believes are hiding wealth offshore. Last month, for example, an Indian living in the American state of New Jersey was indicted for conspiring to hide money from the IRS in offshore accounts held in India and the British Virgin Islands.
The previous scheme flushed out some 15,000 taxpayers with previously undeclared assets, according to the IRS. More than 3,000 additional taxpayers have come forward since that time, who now "will also be eligible to take advantage of the special provisions of the new initiative", the IRS said.
