IRS Announces A Second Voluntary Offshore Disclosure Initiative

The IRS announced a voluntary disclosure initiative for taxpayers with undisclosed foreign financial accounts. It applies to both individuals and entities who make timely, accurate and complete disclosure of their foreign accounts. The IRS announced the initiative, officially called the 2011 Offshore Voluntary Disclosure Initiative, on February 8, 2011. The 2011 initiative covers the 2003 to 2010 time period and follows the IRS's very successful 2009 initiative that saw thousands of taxpayers disclose their foreign accounts to the IRS.

Details of the 2011 Offshore Voluntary Disclosure Initiative

The penalty faced by taxpayers who take advantage of the 2011 voluntary disclosure initiative is steeper at 25% than the 20% penalty that taxpayers faced during the 2009 initiative. The IRS believed that it was important to increase the penalty to avoid rewarding taxpayers who failed to take advantage of the 2009 voluntary disclosure initiative.