Offshore-bank users get until Oct. 15 to confess
— -- Americans who have used offshore bank accounts to evade taxes will get additional time to voluntarily disclose their assets under a one-time extension of an IRS leniency program set to be announced Monday.
The leniency program, originally due to expire Wednesday, will continue until Oct. 15, said government officials with direct knowledge of the decision. The officials were granted anonymity because they weren't authorized to discuss the issue before the announcement.
The IRS approved the continuation in response to requests from lawyers and tax preparers who told the agency they have been swamped with late-filing applicants, the officials said.
"We have seen what I would classify as an unprecedented number of calls from clients and potential clients," William Sharp, a tax attorney in Tampa, said before the extension decision.
The IRS for its part has had to reassign staffers to handle an application surge since the program began in March. More than 3,000 applications have been filed so far, dwarfing the 88 filed in all of 2008, the officials said.
Offshore account owners approved for the program by the IRS generally avoid criminal prosecution and pay:
• Back taxes and interest for a minimum of six years.
• A 25% delinquency penalty for each year in which tax returns weren't filed, or a 20% accuracy penalty for years in which returns were filed but offshore income was omitted.
• A penalty equal to 20% of the highest aggregate value at any point during the last six years for all previously secret accounts.
Ordinarily, the IRS could impose penalties of at least 50% for all years in which an account wasn't disclosed. In some cases, that could exceed the value of the offshore holdings.
Those eligible for the reduced sanctions specifically include clients of Swiss bank giant UBS, which last month settled a court battle by agreeing to turn over account data for nearly 4,500 suspected American tax evaders.
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