by Brian Mahany
BREAKING NEWS: The IRS announced yesterday (Friday August 26th) that the deadline for participation in the IRS offshore tax amnesty (Offshore Voluntary Disclosure Initiative) was being extended 9 days to September 9th. The official reason for the extension is Hurricane Irene, although the IRS office processing the OVDI program is not located in Washington D.C.
We have received as many telephone calls in the last 2 weeks as we have for the entire 7 month period from February through August. Lot’s of folks have waited until the absolute last minute before taking the plunge and participating. Unfortunately, we turned down several simply because they waited to long. With the announced 9 day extension, we are able to take a few more if they call immediately.
There has been a great deal of confusion about the deadline for the program. Unlike the last amnesty program, this one requires the application to be complete or substantially complete by the deadline. With so much paperwork required, that has caused many tax attorneys and CPA’s to simply say “no more.” Since we were caught up this week, the last minute extension allows us to accept a few more clients.
Once the program ends, the waters become more treacherous.
The advantage to OVDI is avoiding criminal prosecution and having some certainty in one’s financial affairs. While the amnesty penalties are steep – 5, 12.5 or 25% of the highest historical offshore account balance – they are predictable. Participants know exactly what they owe.
Once OVDI ends, it becomes a negotiating game. Penalties can involve prison or 50% per year of the account balance and the IRS can go back a decade or more. While the risk of criminal prosecution is low for most people, the uncertainty regrading penalties is quite high. In most instances, people going through amnesty will receive lower penalties. There are exceptions to every rule, of course.
If you are still sitting on the fence, give us a call immediately. Don’t wait. Even if you choose not to participate, let us help you understand the risks of getting caught and how you are likely to fair if you do choose amnesty. We have helped several people who were pleasantly surprised to find they qualified for the lower penalties in the program.
Mahany & Ertl, LLC – America’s Tax Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & San Francisco, California