Member Article

The 2012 disclosure program is similar to the 2011 disclosure program which closed on August 31, 2011 (described in our tax alert dated February 14, 2011), except that, unlike the 2011 disclosure program, there is no set deadline for taxpayers to apply for the new disclosure program. In addition, taxpayers in the highest penalty category will face penalties of 27.5 percent of the highest aggregate balance in foreign bank accounts or value of foreign assets during the eight years prior to the disclosure (rather than 25 percent as under the 2011 disclosure program). Taxpayers who were eligible under the 2011 disclosure program for the 5 percent penalty (in general, foreign residents who were unaware they were U.S. citizens or who fulfilled the tax payment and reporting requirements of their country of residence, or taxpayers who have specific types of limited contact with the foreign account) or the 12.5 percent penalty (taxpayers whose highest aggregate account balance in each of the eight years covered by the disclosure program was less than $75,000) will similarly qualify for 5 percent or 12.5 percent penalties, as applicable, under the 2012 disclosure program.

However, taxpayers should be aware that the IRS news release states that “the terms of the program could change at any time [and]…the IRS may increase penalties in the program for all or some taxpayers or defined classes of taxpayers ― or decide to end the program entirely at any point.” The IRS news release also states that additional information regarding the 2012 disclosure program and updated Frequently Asked Questions will be available within the next month on the IRS website.