In January 2012 the U.S. Internal Revenue Service reinstated its previous successful Voluntary Disclosure Program (VDP); a half-hearted amnesty program with no guarantees of non-prosecution for tax evasion. The IRS had two previous VDP’s; one in 2009 and 2011. The previous programs raked in a combined total of over 4 billion dollars from tens of thousands of now reformed tax evaders. But, the previous VDP’s were prior to the IRS negotiating and/or entering into Intergovernmental Agreements with over 50 countries. So, the overwhelming majority of reformed tax dodgers were not prosecuted.
Many U.S. citizens of the Jewish faith are also citizens of Israel. This dual citizenship affords U.S. citizens, whether resident in the U.S. or Israel, access to Israel’s banking system.
Anticipating eventual capture dozens of U.S. citizens with accounts in two Israeli Banks (Bank Leumi & Mizrahi Tefahot Bank) retained Lawyers and applied under the 2012 VDP and were accepted by the IRS. Then on 7th March 2013 Lawyers for the VDP participants stated they had received letters from the IRS informing them all of their clients were no longer acceptable for the VDP: leaving them exposed to prosecution. Many having already settled their back taxes with the IRS. The IRS gave no explanation for the reversal and the Lawyers did not speculate.
Reference: REUTERS ARTICLE LINK
We have to wait to see how this incident further develops; if the IRS ever provides an explanation. But maybe this is the beginning of the end for the Voluntary Disclosure Program for those with bank accounts in countries negotiating a FATCA Intergovernmental Agreement (IGA) with the IRS. Maybe the U.S. government is going to count any voluntary surrender, with an account in an “in IGA negotiations” as being already caught and subject to prosecution?
What do you think?
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