The Internal Revenue Service’s Offshore Voluntary Disclosure Initiatives are generally effective at convincing thousands of taxpayers with foreign bank accounts to come forward and disclose them to avoid heavy penalties and criminal prosecution, but some improvements are needed, according to a new government report.
The report, by the Treasury Inspector General for Tax Administration, noted that the IRS’s 2009 Offshore Voluntary Disclosure Initiative prompted nearly 7,000 taxpayers in 2009 and over 10,000 taxpayers in 2010 with hidden offshore assets and income to disclose them to the IRS. The IRS announced a 2011 OVDI in February with stiffer penalties.
The TIGTA report found that the IRS’s voluntary disclosure practices were effective, and cases were being appropriately assigned and verified, despite the unusually high volume of disclosure requests received and accepted by the IRS. However, some improvements are needed.
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