January 09, 2012
Taxation Alerts

Third Offshore Voluntary Disclosure Program
by Bridget McInerney Harris

The IRS has reopened the Offshore Voluntary Disclosure Program ("OVDP") for taxpayers with offshore accounts. This program will remain open indefinitely; however the IRS may close the program at any time. This third OVDP is similar to the prior two programs in that a penalty will apply and all prior returns must be filed and taxes and penalties paid. In general, the OVDP penalty is 27.5 percent of the highest aggregate balance in the foreign bank accounts or value of foreign assets during the eight full tax years prior to the disclosure. The OVDP penalty has increased from 20% to 25% and now 27.5%. In limited circumstances the taxpayer may qualify for a 5 percent penalty and smaller accounts may incur only a 12.5 percent penalty.

IRS Circular 230 Disclosure

To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
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