Nancy Olson, the National Taxpayer Advocate which is the IRS watchdog service charged the IRS of reneging on its promise to cap penalties on taxpayers for offshore disclosures of their income. Accusing the IRS of “bait and switch”, Olsen said the IRS in its most recent Offshore Voluntary Disclosure program has seen scores of taxpayers participating in the program and paying more than what they were supposed to pay in taxes and fines. Such taxpayers are typically those who have inherited accounts or work overseas.
Olson warned that dissatisfaction in how the IRS is conducting the voluntary disclosure program might seriously undermine the trust in the IRS in future compliance programs. However, the IRS through its spokesman Dean Patterson strongly refuted Olson’s comments saying, “If at any time during the certification process, a taxpayer disagreed with the results provided for under the program the taxpayer could opt out of the program and make their case for lower penalties. This option is still available today.”
On Monday, the IRS announced the start of another Offshore Voluntary Disclosure program like the two held in 2009 and 2011 in which about $4.4 billion was collected in taxes and fines from more than 33,000 US taxpayers who had taxable assets in overseas bank accounts.
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