Revenooers Still After Those Foreign Accounts
Always on the lookout for more and more dough, IRS revealed this week that it is once again (for the third time now) in the search for offshore assets and income – it has reopened the “offshore voluntary disclosure program.”
Hoping that it might collect even more than the $4.4 billion derived on the first two attempts, IRS Commish Shulman noted that “This new program makes good sense for taxpayers still hiding assets overseas and for the nation’s tax system……As we’ve said all along, people need to come in and get right with us before we find you. We are following more leads and the risk for people who do not come in continues to increase.”
Are you shaking in your boots yet?
IRS has said that the new program is similar to the one conducted last year, but with a few striking differences. Unlike the last program, there is no set deadline with which malingerers must comply – at least not yet.
And the overall penalty structure is the same as last year’s, except for taxpayers in the highest penalty category. The new program provides for a penalty of 27.5% of the highest aggregate balance in foreign bank accounts during the eight full tax years before the disclosure (up from 25%). Some folks will be eligible for 5% or 12.5% rates of penalty under the new deal.
Also, program participants must file all original and amended tax returns and include payment for back taxes and interest for up to eight years, in addition to the payment of
accuracy-related and/or delinquency penalties.
Keep an eye on www.irs.gov for more details of the new program, forthcoming within the next month.
And speaking of enforcement, take note of the fact that IRS collected over $55 billion in “enforcement revenue” in fiscal year 2011, according to stats recently released. “Enforcement revenue” includes tax, interest and penalties – essentially, audit findings. And all of this from relatively low rates of audits, as a percentage of all taxpayers. If your income was under $200,000, your odds of an audit during this most recent year were about one in a hundred. On the other hand, the audit coverage rate was 12.48% for folks reporting income of $1 million and higher.
The sad fact, however, is that there are still a whole bunch of people who don’t report or pay at all! IRS says the “tax gap” was something like $385 billion – after taking into account audit recoveries! A shocking 85.5% compliance rate!
O Tempora, O Mores!
CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation.
Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He can be reached at 831-7288, welcomes comments at email@example.com, and invites readers to consider his other commentaries at http://blog.nolo.com/taxes.