The Internal Revenue Service has announced a new program, the Offshore Voluntary Compliance Initiative, designed to round up promoters of and participants in offshore banking and credit card accounts.
Taxpayers who approach the IRS by April 15, 2003 and declare ownership of offshore credit card or bank accounts in which they have protected funds from U.S. income taxation may be eligible to participate in the amnesty program. Eligible taxpayers will still be liable for back taxes, interest, and penalties on unpaid taxes, but civil fraud charges and criminal prosecution will not be pursued according to Revenue Procedure 2003-11.
In order to receive the amnesty, a taxpayer must not only declare participation in the offshore accounts but must also provide the IRS with information about the promoters who got the taxpayer involved in the account. The IRS intends to use the information collected from taxpayers who participate in the amnesty program to go after the promoters of these offshore tax shelters and also to seek the names of the promoter's other clients and go after those people as well.
"It's time for those involved in abusive avoidance schemes to make things right," said acting IRS Commissioner Bob Wenzel.
The government estimates that there are hundreds of thousands of taxpayers participating in schemes to shield income in offshore accounts representing millions of dollars in lost tax revenue.
The IRS has targeted offshore accounts as a source of lost revenue and in the past two years has gathered information about offshore credit card holders from MasterCard, Visa, and American Express. Tax professionals have suggested that the IRS may not have the personnel to follow all of the leads it has received from these companies and is hoping the amnesty program will relieve some of the burden of auditing all of the participating taxpayers.
"Our investigators have gathered valuable information about offshore payment cards and offshore financial arrangements in recent months.... The IRS is sending a clear signal that those involved in these offshore schemes should come forward now," said Mr. Wenzel.
Taxpayers wishing to participate in the amnesty program should mail a written request by April 15, 2003 to:
National Offshore voluntary Compliance Initiative Coordinator
Bensalem, PA 19020
Overnight mail and Special Delivery requests should be sent to:
National Offshore Voluntary Compliance Initiative Coordinator
11601 Roosevelt Blvd.
Philadelphia, PA 19154
For more information about the program, contact the Voluntary Compliance Initiative office at 215-516-3537 or send an e-mail message to VCI@irs.gov.