Canadian Tax Adviser
January 17, 2012
IRS Reopens Voluntary Disclosure Program for
Offshore Bank Accounts
Toronto, U.S. Corporate Tax
Toronto, International Executive Services
The IRS has relaunched a special voluntary disclosure initiative
for individuals to disclose offshore entities or accounts.
Taxpayers that intend to make a disclosure must file all original and
amended tax returns and include payment for taxes, penalties and up to eight
years of interest.
The IRS indicated that although the program is currently open for an indefinite period,
it could change the terms of the program in the
This initiative is the third program offered by the IRS to
taxpayers with foreign accounts, with previous programs ending in 2009 and
2011. The IRS notes that it has collected more than $4.4 billion from
The overall penalty structure under the new program is the same as
was in place under the 2011 program, except for taxpayers in the highest
penalty category. Under the new program, the penalty framework requires
taxpayers to pay a penalty of 27.5% of the highest aggregate balance in
their foreign bank accounts and entities or value of foreign assets during
the eight full tax years before the disclosure. This is an increase from the
25% penalty that applied under the 2011 program.
Some taxpayers will be eligible for 5% or 12.5% penalties (i.e., for
smaller offshore accounts or assets whose value did not exceed $75,000
in any calendar year subject to the program); these reduced penalties remain
the same in the new program as in 2011.
More details on the program will be made available within the next month,
and the IRS indicated that it will update key “frequently asked
questions” (FAQs) and provide additional specifics on the offshore program
in the future.
More relief coming for accidental Americans?
The IRS also stated it is currently developing procedures for dual citizens
and others who may be delinquent in filing, but owe no U.S. tax (e.g., dual
citizens residing outside the United States who have not filed a required
U.S tax return or Report of Foreign Bank and Financial Accounts (FBAR)) to
comply with U.S. tax law.
For more information, contact your KPMG adviser.