By Bernie Becker - 06/18/14 12:27 PM EDT
The IRS announced Wednesday that it was trying to make it easier for taxpayers to come clean about offshore accounts.
John Koskinen, the IRS commissioner, said in a statement that the changes would convince more taxpayers to get up-to-date on their taxes.
“The new versions of our offshore programs reflect a carefully balanced approach to ensure everyone pays their fair share of taxes owed,” Koskinen said in a statement.
“Through the changes we are announcing today, we provide additional flexibility in key respects while maintaining the central components of our voluntary programs.”
The changes announced Wednesday amount to the IRS’s latest effort to promote tax compliance and to crack down on offshore tax evasion, which has been an agency priority for years.
The new rules also come just under two weeks before the Foreign Account Tax Compliance Act goes into effect. FATCA mandates that foreign banks tell the IRS about accounts held by U.S. taxpayers.
Under the changes, taxpayers living in the U.S. will be able to take advantage of the program for those that didn’t willfully avoid taxes. Previously, the procedures were only available to nonresidents.
The new rules also make it easier for taxpayers to take part in the program, by eliminating a required questionnaire and making those with more than $1,500 in unpaid taxes per year eligible.
Taxpayers living outside the U.S. would get another bonus, as they wouldn't face any penalties if they successfully complete the procedures. For taxpayers living in the U.S., the penalty would be 5 percent of the assets in the foreign account.
Taxpayers trying to enter the Offshore Voluntary Disclosure Program, on the other hand, will have to hand over more information to the IRS.
That offshore program, first put into place in 2009, has drawn in 45,000 taxpayers, who paid around $6.5 billion in back taxes, and is meant for taxpayers who willfully tried to evade the IRS.
Taxpayers trying to enter the new program could face stiffer penalties, and have to pay the penalty when they apply.
Those who use a financial institution that is being investigated by the IRS or the Justice Department could face a 50 percent penalty on their offshore holdings, instead of the current 27.5 percent.
The IRS said that deciding whether a taxpayer evaded taxes on purpose would often have to be decided on a case-by-case basis.