US taxman extends offshore disclosure deadline

The US taxman has extended its deadline for special voluntary disclosures by
taxpayers with undeclared income from offshore sources to come forward.

Under the initial terms of the special provision, taxpayers had until 23
September to declare their foreign income, but the
Internal Revenue Service
(IRS) said it had decided in favour of the extension after accountants and
lawyers reported being deluged by special requests from clients.

“By extending the deadline for a short period of time, the IRS is providing
relief for those taxpayers who had intended to come forward prior to the
deadline, but faced logistical and administrative challenges in meeting it,” the
body said.

The IRS may impose a 50% penalty on the balance of each offshore account for
every year the account remains undisclosed under normal rules, as well as
levying tax on any income earned from the foreign account.

If found guilty of wilful failure to declare foreign earnings, taxpayers may
also face a fine equivalent to 75% of unpaid taxes and a penalty of $100,000 ()
or 50% of the balance of the offshore account.

If the earnings are declared by 15 October however, the taxpayer will be
eligible for a reduced fixed penalty equivalent to 20% (reducible to 5% under
certain circumstances) of the day the account held its highest aggregate value
over the past six years.

Taxpayers with foreign earnings failing to meet the new deadline face harsher
penalties, as well as possible criminal prosecution.

Further reading:

Confusion reigns over HMRC’s
conflicting tax amnesties

Timms heralds “new world” of pain
for tax cheats

Tax avoidance clampdown “could end
poverty”