IRS Receives 30,000 Disclosures of Offshore Bank Accounts

The Internal Revenue Service has gotten 12,000 new applications under its 2011 voluntary disclosure program of offshore bank accounts, pushing the total number of disclosures to 30,000 since 2009, when the IRS began offering a way for U.S. taxpayers to voluntarily disclose their foreign bank accounts.

The IRS said it has collected $2.2 billion to date from taxpayers who participated in the original 2009 voluntary disclosure program from the 80 percent of those cases that have been closed so far. The IRS held open the program an extra long time because more and more taxpayers came forward, and it introduced a newer program this year with the stricter penalties for those taxpayers who did not come forward under the original program.

The IRS said it has also collected an additional $500 million in taxes and interest as down payments for the 2011 offshore disclosure program, a figure that will increase because it doesn’t yet include penalties.

The IRS has been ramping up its efforts to prod taxpayers into disclosing their secret bank accounts, in some cases teaming up with the Justice Department to pursue banks like UBS and Credit Suisse to encourage them to reveal information on their U.S. customers.

“By any measure, we are in the middle of an unprecedented period for our global international tax enforcement efforts,” said IRS Commissioner Doug Shulman in a statement. “We have pierced international bank secrecy laws, and we are making a serious dent in offshore tax evasion.”

Global tax enforcement has turned into a top priority at the IRS. Shulman claimed progress on multiple fronts, including ground-breaking international tax agreements and increased cooperation with other governments. In addition, the IRS and the Justice Department have increased their efforts at criminal investigation of international tax evasion.

The combination of efforts helped support the 2011 Offshore Voluntary Disclosure Initiative, which ended on Sept. 9. The 2011 effort followed the strong response to the 2009 Offshore Voluntary Disclosure Program that ended on Oct. 15, 2009. The programs gave U.S. taxpayers with undisclosed assets or income offshore a second chance to get compliant with the U.S. tax system, pay their fair share and avoid potential criminal charges.

The 2009 program led to approximately 15,000 voluntary disclosures and an additional 3,000 applicants who came in after the deadline, but were allowed to participate in the 2011 initiative. Beyond that, the 2011 program has generated an additional 12,000 voluntary disclosures, with some extra applications still being counted. From these efforts, taxpayers came forward and made a total of 30,000 voluntary disclosures.

“My goal all along was to get people back into the U.S. tax system,” Shulman said. “Not only are we bringing people back into the U.S. tax system, we are bringing revenue into the U.S. Treasury and turning the tide against offshore tax evasion.”

In new figures announced Thursday from the 2009 offshore program, the IRS has $2.2 billion in hand from taxes, interest and penalties representing about 80 percent of the 2009 cases that have closed. These cases come from bank accounts in 140 countries.

The IRS said it is beginning to work through the 2011 applications. The $500 million in payments so far from the 2011 program brings the total collected through the offshore programs to $2.7 billion.

“This dollar figure will grow in the months ahead,” Shulman said. “But just as importantly, we have changed the risk calculus. Americans now understand that if they try to hide assets overseas, the chances of being caught continue to increase.”

People hiding assets offshore have received jail sentences running for months or years, and have been ordered to pay hundreds of thousands and even millions of dollars, the IRS noted. UBS AG, Switzerland’s largest bank, agreed in 2009 to pay $780 million in fines, penalties, interest and restitution as part of a deferred prosecution agreement with the U.S. government.

The two disclosure programs provided the IRS with a wealth of information on various banks and advisors assisting people with offshore tax evasion. The IRS said it would use this information to continue its international enforcement efforts.

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