The IRS has provided everyone who has been hiding money in a foreign bank account from the IRS with a second chance to come clean. The IRS announced a new offshore voluntary disclosure initiative for those who were thinking that Wikileaks won't get hold of their bank records from a disgruntled Swiss bank employee.
The new initiative requires a 25 percent penalty for most participants; but there is a 12.5 percent penalty for those with small (under $75,000) accounts and a five percent penalty for those who didn't open or cause the account to be opened.
Anyone who wants to participate will have to file original or amended returns and pay all taxes, interest and accuracy-related penalties before August 31, 2011. Also, anyone who wants to participate should consult a tax lawyer to get clearance because if there is a current criminal investigation you can't participate.
The IRS has posted answers to frequently asked questions and a brief guide to the various stages of the initiative on its website http://www.irs.gov/.
Since the IRS continues to investigate allegations that foreign owned banks have facilitated (or promoted) tax evasion by U.S. residents, its good to have a second chance.