IRS considers new amnesty for overseas tax cheats
WASHINGTON – The Internal Revenue Service is seriously considering a new program of reduced penalties for overseas tax cheats who turn themselves in.
About 15,000 people came clean last year as part of an IRS offer of reduced penalties and no jail time for tax cheats who turn themselves in. The program was so successful, the agency is considering another one, IRS Commissioner Doug Shulman told an international tax conference Thursday.
Since last year's program, an additional 3,000 tax cheats have come forward, Shulman said.
"Collecting additional revenue for past misdeeds, as important as that may be, is not the only important consideration here," Shulman said. "It is equally important that we are bringing 18,000 U.S. taxpayers, and counting, back into the system, back into compliance so they properly report and pay their taxes for years to come."
Last year's offer was made as the IRS stepped up efforts to go after Americans hiding money overseas, including a well-publicized case involving Swiss banking giant UBS AG. The IRS is using information gathered from those who came forward to go after others, Shulman said.
Shulman said any new program would not be as generous as last year's, though he didn't provide details.
"To be fair to those who came in before the deadline, the penalty — and thus the financial cost to participate — will increase," Shulman said.
The IRS has long had a policy that certain tax evaders who come forward before they are contacted by the agency usually can avoid jail time as long as they agree to pay back taxes, interest and hefty penalties. Drug dealers and money launderers need not apply. But if the money was earned legally, tax evaders can usually avoid criminal prosecution.
Fewer than 100 people apply for the program in a typical year, in part because the penalties can far exceed the value of the hidden account, depending on how long the account holder has evaded U.S. taxes.
Last year, the IRS began a temporary amnesty program that sweetened the offer with reduced penalties for people with undeclared assets.