|Published:||Feb 08, 2011 8:21 PM EST|
|Updated:||Feb 08, 2011 5:21 PM EST|
WASHINGTON- International tax evaders who come clean will be able to avoid jail and pay reduced fines under a new voluntary disclosure program announced by the Internal Revenue Service Tuesday.
Tax cheats will have until Aug. 31 to settle up with the IRS or face an ongoing crackdown against Americans who hide assets overseas, IRS Commissioner Doug Shulman said.
"If we find you, you face harsher penalties and the possibility of jail time," Shulman said. "If you come in voluntarily, you pay a steep price but avoid going to jail."
The offer is similar to one the IRS made in 2009 that netted 15,000 tax evaders. Shulman said the IRS has closed 2,000 of those cases, collecting $400 million in additional revenue.
Shulman said the new offer isn't as generous because he doesn't want to reward tax cheats who waited two years to come forward.
Under the new program, tax evaders must pay back taxes, interest and delinquency penalties for the past eight years, if accounts have been held that long. In addition, they will have to pay a penalty of up to 25 percent of the highest annual amount in the overseas account from 2003 through 2010.
Shulman said the 2009 disclosure program provided the IRS with many leads on the bankers and financial advisers who help Americans hide assets. He said the IRS is now investigating "a number of other banks" and is tracking the flow of illicit money.
"We've been getting better and better at detecting offshore accounts. Therefore, the risk of being caught is increasing," Shulman said. "We now have a number of other banks under investigation based on information we received from our first round of disclosures and from other sources. Tax secrecy continues to erode."
Shulman declined to provide details about any ongoing investigations.
The IRS long has had a policy that certain tax evaders who come forward before they are contacted by the agency usually can avoid jail time as long as they agree to pay back taxes, interest and hefty penalties. Drug dealers and money launderers need not apply. But if the money was earned legally, tax evaders can usually avoid criminal prosecution.
Fewer than 100 people apply for the program in a typical year, in part because the penalties can far exceed the value of the hidden account, depending on how long the account holder has evaded U.S. taxes.
Shulman said the IRS expected about 1,000 people to come forward under the 2009 program that netted 15,000. Since the program ended, an additional 3,000 people with offshore accounts have contacted the IRS, Shulman said. They will be eligible for the new program.
"As I've said all along, the goal is to get people back into the U.S. tax system," Shulman said. "This new disclosure initiative is the last, best chance for people to get back into the system."
(Copyright 2011 by The Associated Press. All Rights Reserved.)