As we have reported in recent weeks, the IRS is taking much-needed action to crack down on Americans who hide their income in offshore tax havens to illegally evade their U.S. taxes. One of the biggest developments is a settlement with the Swiss bank UBS, under which it will hand over to the U.S. information about 4,450 of its American clients who may be evading U.S. taxes.
But the IRS is giving these possible tax evaders plenty of opportunities to avoid punishment. The IRS implemented the six-month IRS Offshore Income Reporting Initiative, which is a voluntary disclosure program for foreign financial accounts that started on March 23, 2009 and was supposed to end on September 23.
This week, just two days before the voluntary disclosure program was scheduled to end, the Internal Revenue Service pushed back the deadline until October 15, 2009. The IRS said it had received numerous pleas from tax practitioners and attorneys around the country to extend the program so that they would be able to deal with the last-minute rush of taxpayers wanting to disclose.
Don't think these tax cheats suddenly got religion and want to become virtuous taxpayers. By using the streamlined procedures of the voluntary disclosure program, taxpayers are able to limit their penalties and avoid criminal prosecution. See the previous CTJ report with more details and the IRS guidance. The IRS stressed that no more extensions would be granted.