IRS Announces Second Voluntary Disclosure Initiative

In its continuing scrutiny of U.S. persons with international dealings, on February 8, 2011, the IRS announced a second voluntary disclosure initiative, called the 2011 Offshore Voluntary Disclosure Initiative ("OVDI"), for taxpayers not already under investigation by the IRS. IRS Commissioner Doug Shulman commented that the goal of the program is to "get people back into the U.S. tax system."

Background

U.S. persons are taxed on worldwide income, regardless of the location of the account or asset generating income. In addition to reporting the income on an annual income tax return, the U.S. person is required to file annual information returns to report ownership of foreign accounts and entities.