2011 Offshore Voluntary Disclosure Initiative

Second Special Voluntary Disclosure Program forTaxpayers with Unreported Offshore Assets

On February 8, 2011, the Internal Revenue Service announced a special voluntary disclosure initiative for U.S. persons (i.e., individuals and entities such as corporations, partnerships and trusts) with certain offshore assets.  Under the program, individuals and entities with previously unreported offshore financial accounts can come into full compliance with U.S. tax law and greatly minimize their chances of facing criminal prosecution.  The new program offers taxpayers who make the appropriate disclosures an updated penalty structure which requires participants to pay a penalty of 25 percent of the amount in their respective foreign financial account(s) in the year with the highest aggregate account value (covering the years 2003 to 2010).  In addition, in limited situations, there also exist penalty amounts within the program of 5 and 12.5 percent for certain individuals and entities.

Prior to this new program, there had been only one other official offshore voluntary disclosure initiative offered to noncompliant taxpayers: the 2009 Offshore Voluntary Disclosure Program.  Under this earlier program, which formally ended October 15, 2009, more than 15,000 taxpayers voluntarily disclosed their foreign financial accounts and paid penalties of up to 20 percent.  While the new program provides for increased penalty amounts relative to the former initiative, it provides noncompliant taxpayers who make full and truthful disclosures the opportunity to come into compliance, avoid substantial civil penalties and, in many cases, eliminate the risk of criminal prosecution.
To take full advantage of the program, participants must agree to pay all taxes and interest stemming from the previous eight years and, in addition, pay any applicable accuracy-related and delinquency penalties.  All of the necessary tax return filings and tax, interest, and penalty payments must be made prior to August 31, 2011, the end of the new program.  As there are a great number of technical qualifications required for eligibility to participate in the initiative, it is imperative that taxpayers with unreported offshore financial assets contact an appropriate advisor to fully discuss their specific situation.  Please contact Christopher K. Braun, MBA, JD, LLM, Partner, Baker Tilly, in the United States at 608-334-4835 (Christopher.braun@bakertilly.com) for further information or details.

On February 8, 2011, the Internal Revenue Service announced a special voluntary disclosure initiative for U.S. persons (i.e., individuals and entities such as corporations, partnerships and trusts) with certain offshore assets.  Under the program, individuals and entities with previously unreported offshore financial accounts can come into full compliance with U.S. tax law and greatly minimize their chances of facing criminal prosecution.  The new program offers taxpayers who make the appropriate disclosures an updated penalty structure which requires participants to pay a penalty of 25 percent of the amount in their respective foreign financial account(s) in the year with the highest aggregate account value (covering the years 2003 to 2010).  In addition, in limited situations, there also exist penalty amounts within the program of 5 and 12.5 percent for certain individuals and entities.

Prior to this new program, there had been only one other official offshore voluntary disclosure initiative offered to noncompliant taxpayers: the 2009 Offshore Voluntary Disclosure Program.  Under this earlier program, which formally ended October 15, 2009, more than 15,000 taxpayers voluntarily disclosed their foreign financial accounts and paid penalties of up to 20 percent.  While the new program provides for increased penalty amounts relative to the former initiative, it provides noncompliant taxpayers who make full and truthful disclosures the opportunity to come into compliance, avoid substantial civil penalties and, in many cases, eliminate the risk of criminal prosecution.

To take full advantage of the program, participants must agree to pay all taxes and interest stemming from the previous eight years and, in addition, pay any applicable accuracy-related and delinquency penalties.  All of the necessary tax return filings and tax, interest, and penalty payments must be made prior to August 31, 2011, the end of the new program.  As there are a great number of technical qualifications required for eligibility to participate in the initiative, it is imperative that taxpayers with unreported offshore financial assets contact an appropriate advisor to fully discuss their specific situation.  Please contact Christopher K. Braun, MBA, JD, LLM, Partner, Baker Tilly, in the United States at 608-334-4835 (Christopher.braun@bakertilly.com) for further information or details.