US Offshore Tax Amnesty Brings In USD5bn
The United States Internal Revenue Service (IRS) has announced that its offshore voluntary disclosure programmes (OVDPs) have collected more than USD5bn, and that it has tightened the eligibility requirements of the third programme it opened in January this year.
"We continue to make strong progress in our international compliance efforts that help ensure honest taxpayers are not footing the bill for those hiding assets offshore," said IRS Commissioner Doug Shulman. "People are finding it tougher and tougher to keep their assets hidden in offshore accounts."
Shulman added the IRS OVDPs have so far resulted in the collection of more than USD5bn in back taxes, interest and penalties from 33,000 voluntary disclosures made under the first two programmes. In addition, another 1,500 disclosures have been made under the new programme announced in January.
The IRS reopened the third OVDP following continued strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programmes. It will be open for an indefinite period, until otherwise announced. Unlike last year, there is no set deadline for people to apply, but its terms could change at any time in the future.
Under the current OVDP, the offshore penalty has been raised to 27.5% from 25% in the 2011 programme, but the reduced penalty categories of 5% and 12.5% are still available.
The IRS has also closed a loophole that has been used by some taxpayers with offshore accounts. Under existing law, if a taxpayer challenges in a foreign court the disclosure of tax information by that government, the taxpayer is required to notify the US Justice Department of the appeal.
The IRS said that if the taxpayer fails to comply with this law and does not notify the US Justice Department of the foreign appeal, the taxpayer will no longer be eligible for the OVDP. The IRS also put taxpayers on notice that their eligibility for OVDP could be terminated once the US government has taken action in connection with their specific financial institution.