The Internal Revenue Service’s Voluntary Disclosure Program which offers reduced penalties and zero jail time for those that report illegally stashed income in overseas shelters is working. A similar program was implemented in 2009, and between these two programs, over 30,000 tax evaders have disclosed income from accounts in 140 countries, netting the IRS over $2.25 Billion dollars in back taxes, penalties and fines.
“The world has clearly changed,” [IRS Commissioner Douglas] Shulman said. “We have pierced international bank secrecy laws, and we’re making a serious dent in offshore tax evasion…Unlike a few years ago, it’s very clear now that there’s a real price to be paid for people who think they can hide offshore and not pay their taxes”
The latest disclosure program offered reduced penalties, but it was no free walk. Taxpayers were required to pay up to eight years of back taxes and a penalty of up to 25 percent of the highest annual amount in the overseas account from 2003 through 2010.
The disclosure programs have also provided the IRS with information about banks and advisers who have assisted people with offshore tax evasion. Shulman said the agency will use the information to continue its enforcement efforts.
With the financial crisis, a looming double dip recession, states on the verge of bankruptcy & the recent discovery that the IRS pays out nearly as much in entitlements & credits than it collects in taxes, its becoming harder to find that “free lunch”.