The agency will no longer require them to answer a risk questionnaire, and won’t limit the procedure to those with $1,500 or less of unpaid tax. Taxpayers must certify that “previous failures to comply were due to non-willful conduct,” the agency said.
Penalties Waived
For non-willful taxpayers outside the U.S., all penalties will be waived. Those inside the U.S. face penalties of up to 5 percent.
The IRS has run three offshore voluntary disclosure programs since UBS AG, the largest Swiss bank, avoided prosecution in 2009 by paying a $780 million penalty and admitting it fostered tax evasion. The penalties have increased with each version of the program.
The first one, announced in 2009, set penalties at 20 percent and drew 18,000 taxpayer disclosures with $3.4 billion in back taxes, interest and penalties.
The 2011 program had a 25 percent penalty, drawing 15,000 disclosures and $1.6 billion. A 2012 program, with a 27.5 percent penalty, drew 12,000 disclosures. The IRS didn’t give a dollar amount.
“Our aim is to get people to disclose their accounts, pay the tax they owe and get right with the government,” IRS commissioner John Koskinen said in a statement. “At the same time, for important categories of these non-willful people with offshore issues, a compliance regime that is too harsh won’t net the desired result.”
Unlike most countries, the U.S. taxes its citizens on income they earn around the world regardless of where they live, creating a burden for many expatriates and people who have birthright citizenship but little other connection to the country.