The Offshore Voluntary Compliance Initiative (OVCI) is reporting strong results. The program, designed by the U.S. Treasury Department to encourage wealthy individuals to pay taxes on income hidden in offshore banks, received some unwarranted bad press this week when two U.S. Senators misread a Treasury report and questioned the success of the effort.
Earlier this year the IRS announced that more than 1,200 people had responded to the initiative, offering to report offshore income and pay the taxes, thus avoiding potential civil fraud charges and criminal prosecution. The IRS indicated that it hoped to recover as much as $100 million through the amnesty program.
This week, Senators Charles Grassley (R-IA), chairman of the Senate Finance Committee, and Max Baucus (D-MN) admonished Treasury Secretary John Snow over the performance of the amnesty program. They claimed that, according to a report issued by the Treasury's inspector-general for tax administration, the IRS had so far collected less than $1 million through the amnesty program and that the program had so far cost an estimated $56 million.
The two senators rescinded their remarks yesterday after learning that their staff had misread the inspector-general's report. In a second letter to Treasury Secretary Snow, they admitted, "The IRS's Offshore Voluntary Compliance Initiative has been more successful than previously thought."
Results of the OVCI so far show that more than $75 million has been collected. Also the IRS reports that more than 400 promoters of offshore tax schemes have been identified. More tax revenue is anticipated as the program's October 15 deadline approaches. The cost of the program to date is only approximately $2 million.