IRS GIVES CHEATS A BREAK

NEW YORK (CNNMoney) — The IRS has collected $4.4 billion from two programs that allowed tax evaders hiding money in offshore accounts to come clean and said it will launch a similar initiative this year.

The two voluntary disclosure programs, launched in 2009 and 2011, allowed taxpayers to pay reduced penalties and avoid jail time if they disclosed information about their offshore accounts.

The 2009 program netted $3.4 billion, and the 2011 program has brought in payments of $1 billion so far — an amount that’s expected to grow as the IRS processes the rest of the cases from last year, the agency said Monday. In all, 33,000 taxpayers have voluntarily come forward through the two programs.

Because of the success of the initiatives, the IRS also announced Monday that it is opening a third voluntary disclosure program for 2012.

“Our focus on offshore tax evasion continues to produce strong, substantial results for the nation’s taxpayers,” said IRS Commissioner Doug Shulman. “We have billions of dollars in hand from our previous efforts, and we have more people wanting to come in and get right with the government.”

Tax gap: IRS comes up $385 billion short

Unlike the past two initiatives, this year’s program doesn’t have a set deadline by which taxpayers must turn themselves in. But the IRS said it can change the terms of the program at any time, which could mean closing it altogether or increasing penalties.

For now, taxpayers disclosing offshore accounts are required to pay a penalty of 27.5% of the highest aggregate balance in their offshore accounts during the eight tax years prior to disclosing the accounts. That’s up from the 25% penalty in 2011.

The lure of avoiding jail time is still there for the new program, and, as in the prior programs, taxpayers with smaller accounts may be eligible for lower penalty rates of 5% to 12.5%.

The program also requires tax evaders to fork over back taxes, interest and late charges for up to eight years.

Tax evaders who don’t voluntarily disclose their offshore accounts but are instead caught by the IRS are in much more trouble. They risk jail time, and penalties can even be 50% — or more if fraud is involved — of the total account balance.

As part of the crackdown on offshore accounts, the IRS has also been boosting its audits of millionaires, because offshore accounts are often held by higher-earners, according to the agency. Last year, the IRS audited 1 in every 8 millionaires — meaning about 12.5% of all taxpayers earning one million dollars or more were delivered audits. To top of page

Article source: http://rss.cnn.com/~r/rss/money_topstories/~3/MCkcEXxjcUQ/index.htm

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