The IRS had established a program for taxing US citizens who had been earning $10,000 dollars or more overseas. At the time, with their first initiative, they offered a short window of offshore amnesty on the income earned.
With this first initiative:
- US citizens could voluntarily come forward and disclose any and all unreported income earned offshore.
- One could file up to six years in back taxes to reflect unreported foreign sources of income for amnesty.
- Calculated interest was required, but also pardonable.
- Individuals could apply a 20% accuracy-related penalty or 25% delinquency based upon the largest sum of the individuals account in the last six months.
However, the first IRS offshore amnesty initiative failed due to the lack of information about it. A lack of that same information distributed probably to those with high yielding income on foreign accounts. Therefore, the IRS has now come out with a second initiative allowing individuals to report their offshore income again. Those who fail to sign up their foreign account for amnesty will not receive any pardons once the deadline has passed. They will instead be prosecuted to the full extent of the law. This could lead individuals to receiving a sentence of five years in prison or a $500,000 fine or both.