2011 Voluntary Disclosure Program
/On February 10, 2011, the I.R.S. announced a brief window for taxpayers to come forward and declare unreported foreign bank accounts. According to I.R.S. Commissioner Douglas Shulman, taxpayers with unreported foreign accounts or unreported income related to foreign assets have a “last, best chance” to come into compliance for a limited cost. For most filers, the 2011 Offshore Voluntary Disclosure Program (“OVDP”) will be less generous than the program in 2009. However, persons who resided abroad without knowing of their U.S. citizenship status may be entitled to a reduced penalty. The window to take advantage of the OVDP is extremely brief and those who do not move forward within the next 45 days may find that the window will close rather quickly. A full submission and tax payment must be made by August 31, 2011. Taxpayers who applied to the 2009 program can request application of the reduced penalty structure if applicable to their circumstances.
The Basic I.R.S. Offer
Most taxpayers who come forward under the OVDP will have to pay:
- Back taxes and interest on all unreported income with respect to foreign accounts and assets for the eight years from 2003 to 2010 – two more years than under the 2009 program, which covered 2003-2008;
- Accuracy-related penalties of 20% of the back taxes, and if applicable, up to 25% of back taxes for failure to timely file a return or pay tax shown on a filed return (a new feature);
- 25% of the highest aggregate balance of foreign accounts and/or value of covered foreign assets during the program term, compared to 20% under the 2009 program.
Read the original Client Alert: 2011 Voluntary Disclosure Program →
