On February 8, 2011, the IRS Commissioner announced a second
offshore voluntary disclosure initiative (the "2011
OVDI") for U.S. taxpayers who still have unreported foreign
accounts. The 2011 OVDI largely continues the practices of the 2009
OVDP, but it imposes higher penalties and taxes. The good news is
that the penalty was only increased from 20% to 25% and that
criminal prosecution will not be recommended for complying
participants; the bad news is that taxes, tax penalties and
interest have to be paid for an 8-year period rather than a 6-year
period.
Requirements and Penalties under the 2011 OVDI
Unlike the 2009 OVDP, the 2011 OVDI requires that participating
taxpayers submit their amended tax returns, including all
previously unfiled information returns and FBARs, and pay the
taxes, interest and penalties on or before August 31,
2011. This requirement was intended to simplify the
processing of the information by the IRS, but will make it
difficult for many
