AMNESTY PERIOD FOR ILLEGAL OFFSHORE ACCOUNTS

An illegal offshore account is a bank account in a foreign country in which an American citizen places money that has not been taxed and he does not report that the account exists on his tax return.  Several years ago the IRS began a voluntary disclosure program that allowed taxpayers to disclose these

 

 

accounts, pay a fine and not face criminal prosecution.  That amnesty period ended in October 2009.  However, it was so successful the IRS has begun a new voluntary disclosure period that will end on August 31, 2011.  This program is tougher than the previous one, but it will preclude criminal prosecution if the taxpayer acts now.  She will pay a 25%penalty of the highest aggregate balance on the account for the one year between 2003 and 2010 with the highest balance.  Some taxpayers may be eligible for lower penalties of between 5% and 12.5%.  The taxpayer must also file amended returns for the past eight years and pay the taxes and penalties involved.  If one does not come forward now, he will face higher penalties and criminal prosecution.