The IRS has announced a six-month Voluntary Disclosure program that offers lower penalties to those who come forward and pay taxes due on the secret holdings in offshore accounts. Until now, the IRS could impose penalties of at least 50% for all years in which an account wasn’t disclosed. In some cases, that could exceed the value of the offshore holdings.

The announcement comes amid a U.S. legal battle to get owners’ names for 52,000 UBS accounts in which Americans evaded taxes by holing at least $14.8 billion in Swiss banks.

The IRS also issued a list of 30 frequently asked questions about the Voluntary Disclosure process - which offers leniency to taxpayers with unreported income relating to offshore transactions. Along with lower tax penalties, those who comply are expected to avoid criminal prosecution

We have been making one disclosure after another - including some “quiet disclosures.” While the IRS encourages taxpayer to come forward under the voluntary disclosure offer, it is also possible to file amended returns and pay any related taxes and interest for previously unreported offshore income without otherwise notifying the IRS.

Quiet disclosures should only be attempted by specialized and experienced tax experts, as any amended tax returns reporting increases in income run the risk increased scrutiny from the IRS.

Income tax relief under the voluntary disclosure process is open to all taxpayers that comply with IRS’s terms, including corporations, partnerships and trusts, as well as those taxpayers that have an offshore merchant account. The offer does not apply if IRS has initiated a civil examination of the taxpayer, regardless of whether it relates to undisclosed foreign accounts or undisclosed foreign entities.

According to USA Today:

Under the plan, owners who disclose foreign accounts would pay:

* Back taxes and interest for a minimum of six years.

* A 25% delinquency penalty for each year in which tax returns weren’t filed, or a 20% accuracy penalty for years in which returns were filed but income from offshore accounts wasn’t included.

* A penalty equal to 20% of the highest aggregate value at any point during the last six years for all previously secret foreign accounts.

Robert McKenzie, a lawyer for more than a dozen American clients with UBS accounts, predicted the program would prompt more disclosures because it would enable evaders to compute their liability “almost to the penny” — which wasn’t possible before. The IRS said the number of Americans who have disclosed foreign accounts has more than doubled this federal fiscal year over 2007-08.

** If you require assistance with a voluntary disclosure or need help resolving other IRS problems, contact our specialized staff of tax attorneys, CPAs, EAs and tax professionals. Visit the Tax Resolution Services web site  for a free income tax relief consultation or call us at 866-IRS-PROBLEMS.

More Tax Help, IRS News and Tax Relief Tips:

1. What Small Business Owners Must Know About Payroll Taxes on AccountingSolver.com
2. IRS Asserts Position on Tax Protesters: Sanctions Imposed for Advancing and Maintaining a Frivolous Argument
3. Offshore Account Holders Can Still Seek Amnesty from Criminal Prosecution and Lower IRS Penalties Till September 23
4. Tax Help For UBS Account Holders Seeking IRS Tax Relief For Tax Evasion Charges
5. Tax Resolution News: IRS Warns Against Frivolous Tax Arguments That Can Incur Severe Penalties

Tags: amending tax returns, back tax, filing tax returns, income tax relief, IRS help, IRS penalties, irs problems, IRS tax problems, Michael Rozbruch, off shore banking, quiet disclosures, tax attorney, tax evasion, tax expert, tax resolution, tax resolution services, UBS legal battle, Voluntary Disclosure

This entry was posted on Thursday, May 14th, 2009 at 2:26 pm and is filed under Tax news and tips, Voluntary Disclosure. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.