With the failing of the first tax initiative for American citizens that owned foreign accounts with exceeding $10,000 dollars were safe from being prosecuted for tax evasion. This was decidly due to the lack of information distributed to clients that held such foreign accounts. However, the IRS has not given up, and as of February 8 2011 they have begun another federal tax amnesty program the second initiative.
The second initiative ends August 31 2011 and requires that taxpayers to:
- File eight years back in their foreign sources of income that were not reported to the IRS.
- Calculate the interested that was not paid each year.
- Apply a 20% accuracy-related penalty or 25% delinquency based upon the largest sum of an individual’s accounts in the last six months as they were able to in the first initiative.
This second initiative also allows individuals to apply to the IRS for offshore amnesty in order to avoid penalties and fees. This means that the IRS will not pursue any criminal charges for tax evasion, which could have resulted in jail time and a felony on one’s record, for those who apply. The amnesty program will be dissolved within less than 100 days, and any individual without foreign account amnesty will no longer be eligible to apply again.