Offshore account voluntary disclosure rules

Gideon Rothschild (Partner, Moses & Singer LLP, New York, New York) has recently posted his article entitled New Voluntary Disclosure Procedure For Offshore Accounts.

Here is an excerpt from the article:

Amidst the UBS investigation of offshore bank accounts, the Internal Revenue Service announced, in a memo dated March 23, a new guideline to encourage US taxpayers to come clean on their offshore accounts without the risk of criminal prosecution and significantly increased penalties. Although there has been a voluntary compliance program in place for many years on an informal basis, many taxpayers have been reluctant to come forward for fear that the penalties can exceed the amounts in the offshore accounts.

The new program sets forth maximum civil penalties and an agreement not to criminally prosecute. It is to be administered centrally in the Philadelphia service center to ensure uniformity in the assessment of tax and penalties. Taxpayers who wish to avail themselves of this offer must come forward prior to September 23, 2009. Commissioner Shulman said that “[F]or taxpayers who continue to hide their head in the sand, the situation will only become more dire”, including potential criminal prosecution.