IRS Announces Reopening Of Offshore Disclosure Program

On January 9, 2012 the Internal Revenue Service announced it is reopening its Offshore Voluntary Disclosure Program (OVDP), designed to allow U.S. taxpayers with unreported offshore income and assets to come into compliance with their tax obligations. This is being done because of continued strong interest after the completion of the 2009 and 2011 programs, which together brought in 33,000 voluntary disclosures and the collection of more than $4.4 billion to date. Since the 2011 OVDP closed in September, hundreds of additional taxpayers have come forward to make voluntary disclosures. These taxpayers will be eligible to be treated under the provisions of the new OVDP.

The penalty framework for the new OVDP is similar to that for the 2011 OVDP except the penalty is 27.5 percent of the highest aggregate balance in foreign bank accounts/entities or value of foreign assets during the eight full tax years before the disclosure. The 2011 OVDP imposed a 25 percent penalty of