On 9 January 2012, the US Internal Revenue Service (“IRS”)  issued a  new  notice  creating  the  Offshore   Voluntary Disclosure Program  (“OVDP”)  under  terms  that   differ only slightly from the recently completed 2011 Offshore  Voluntary Disclosure  Initiative  (“2011  OVDI”). The most important difference is that the OVDP does not include an expiration deadline, though IRS reserves the right to bring the program to a close at any time.

Under the new OVDP, individuals who failed to report income  from offshore  assets  will  face  an  “in  lieu  of”   penalty rate of up to 27.5% (up from 25% in the 2011 OVDI) on their highest offshore account balance or offshore asset value over the last 8 years. However, many clients will qualify for a reduced 5% or 12.5% in lieu of penalty.

See full alert below.