IRS Amnesty Plan Nabs 1,200 Taxpayers, $100 Million

The deadline has passed for the Internal Revenue Service's partial amnesty program, the Offshore Voluntary Compliance Initiative, designed to identify promoters and users of offshore banking and credit card accounts who are attempting to avoid paying income taxes. The amnesty program, which ended April 15, 2003, enabled taxpayers to come clean about their participation in such accounts and avoid civil fraud charges and criminal prosecution. The catch was the taxpayers had to turn in the account promoter.

A total of 1,253 taxpayers took the bait and turned themselves in by April 15, with Florida providing the highest number of amnesty plan participants at 141. California had the second highest number at 115, Texas had 71, and New York had 47. Not only does the IRS expect to net over $100 million in uncollected taxes from these miscreants, but the agency has learned of at least 80 new promoters who are in the business of selling illegal offshore accounts.

"We are discovering a gold mine of information," said acting IRS Commissioner Bob Wenzel. "This will provide us with a valuable map to track offshore cheating."

Last year, a federal judge gave the IRS the right to obtain access to records of MasterCard, Visa, and American Express credit card users in 30 countries where it was suspected that the credit cards were being used as a means of diverting income from U.S. taxation. Before pursuing individuals whose names were obtained in those records, the IRS gave taxpayers a chance to reveal their use of offshore accounts under the terms of the amnesty program. The IRS estimates that between 1 and 2 million U.S. citizens use credit cards issued by offshore banks and many of those uses are for the purpose of drawing on those funds in a tax-free manner.

"Taxpayers that have not come forward [under the amnesty program] will be pursued by the IRS and will be subject to more significant penalties and possible criminal sanctions," said Pam Olson, assistant treasury secretary for tax policy.

To take advantage of the opportunity to avoid prosecution, taxpayers who participated in the amnesty program have 150 days to file corrected income tax returns and pay back taxes and related penalties.

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