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IRS uses carrot and stick to get offshore tax compliance

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in Small Business Tax

The IRS has an­­nounced changes in its offshore voluntary compliance program. (IRS News Release IR-2014-73, 6/18/14) The changes are designed to encourage U.S. citizens living abroad to confess about tax transgressions involving foreign accounts. Besides streamlining procedures, the modifications include:

•  Requiring additional information from taxpayers applying to the program

•  Eliminating the existing reduced penalty percentage for certain non-willful taxpayers in light of streamlined procedures

•  Requiring taxpayers to submit all account statements and pay the offshore penalty at the time of application

•  Enabling taxpayers to submit voluminous records electronically rather than using paper

•  Increasing the offshore penalty percentage from 27.5% to 50% when the financial institution is under investigation.

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