IRS offers deal on overseas cash
Taxpayers who are hiding money abroad can escape prosecution if they pay back taxes and penalties. Those who disclose before they get caught get better deals, the agency says.
The Internal Revenue Service is reviving a program that lets Americans hiding their money abroad pay back taxes and penalties while avoiding criminal prosecution, an effort that in recent years has netted the government billions of dollars.
IRS Commissioner Douglas Shulman, who announced the program's renewal this week, said previous efforts in 2009 and 2011 resulted in the collection so far of $4.4 billion from 33,000 people, an amount he said "we never thought we'd reach." He said the government could reap several times that amount from the newest initiative as well as people deciding against stashing their assets overseas in the first place.
"If we catch people before they come in voluntarily, it's going to be a much worse outcome for the taxpayer," Shulman told reporters.
Under the new program, those who voluntarily disclose their offshore holdings will face penalties of up to 27.5% of their assets, plus back taxes and interest for up to eight years. People whose money hidden abroad does not exceed $75,000 could face penalties of 12.5%, and others might face fines of even less.
The IRS bolstered its attempts to locate tax dodgers hiding their assets offshore in 2009, when the Swiss banking giant UBS AG paid a $780 million fine and surrendered information on thousands of accounts suspected of holding funds hidden there by Americans. The IRS has since taken steps such as opening new offices overseas. (Post continues below video.)
Shulman said the IRS could end the new program at any time or change its terms, such as stiffening the penalties. The new program's maximum 27.5% fine is slightly higher than the 25% penalties people faced during the 2011 program.
By coming forward, people avoid the possibility of criminal charges, which could result in jail time and higher penalties. Shulman said the odds of criminal prosecution are growing because of increased cooperation from foreign countries and leads the government has obtained from the 33,000 people who have already participated.
"People who came in earlier get a better deal," he said. "But people who come in now, it still makes sense because the risk of us finding people hiding assets increases every day."
For years, the IRS has allowed some tax dodgers to avoid prison if they pay big penalties plus back taxes and interest, but generally few take advantage because the fines can be huge. The money must be earned legally.
Last year's program ran from February until September, while the 2009 program lasted from March until October.
"The long-term goal is deterrence," Shulman said. "We want to wake up and have the next generation of taxpayers not even think about hiding their assets overseas."
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
More from MSN Money:
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.