IRS Lessened Tax Evasion Amnesty Penalties

2015 is the first year in which the IRS is giving new considerations to taxpayers in violation of the Bank Secrecy Act (BSA), the law that makes reporting all offshore assets mandatory. In June 2014, the organization announced new changes to the Offshore Voluntary Disclosure Program (OVDP), a related program that allows amnesty and minimal penalty for those willing to admit failure to report taxable foreign holdings. The amendment will now give consideration to tax payers identified as "non-willful" violators of the BSA.

The new changes come after the efforts of the Taxpayer Advocate Service (TAS), an independent government watchdog organization. The TAS has alleged the amnesty terms, while preferable to criminal prosecution, can be especially harsh to taxpayers whose failure to report offshore assets was accidental.

Reportedly, consequences for all BSA violators under the amnesty program included:

  • 27.5% civil penalty on all unreported money
  • A maximum of eight years of back taxes
  • Any necessary legal fees

TAS argued that for violators that did not willingly evade taxes, these penalties are still too harsh and can take a crippling bite out the assets kept offshore. The TAS also warned that these consequences might dissuade unwilling violators to report their violations and create new willing violators to continue intended tax evasion.

New "Non-Willful" Amnesty Consideration

On June 18th 2014, the IRS announced a number of different changes to OVDP, including new opportunities to identify taxpayers with unreported offshore assets as "non-willful." Under the changes, these non-willful taxpayers will be shielded from maximum civil penalty. Other changes allowed for streamlined processing procedures and an electronic application option.

If you have failed to report any offshore assets and would like know how these changes to the OVDP can benefit you, then we invite you to call us to speak to an experienced Palm Beach tax lawyer at The Law Office of Michael K. Miller, P.A. today.


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