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If you're squirreling away money in an offshore account, 2012 may be the right year to come clean. The IRS' amnesty program will be in full swing again later this year.
The IRS started the voluntary program in 2009 and opened it again in 2011. The 2009 program has already collected around $3.4 billion. A total of more than 15,000 taxpayers came forward.
The 2011 program brought in $1 billion. This figure is expected to grow as the IRS processes more cases. And it seems clear that the government believes there are more wealthy Americans hiding their assets overseas.
Taxpayers are required to apply for the program. If accepted, they will face penalties -- but likely won't be prosecuted, according to The Wall Street Journal.
The biggest allure of the program is avoiding jail.
The 2012 program will be slightly different. It will carry a higher penalty. Individuals might have to pay 27.5% of the highest aggregate balance in their offshore accounts. They will have to pay for the eight years before they applied for amnesty.
In 2011, the highest penalty was 25%. In 2009, the highest penalty was 20%, reports the Journal.
The penalties are also on a sliding scale. Some taxpayers may only be penalized 5% or 12%. It all depends on how much money is held in the offshore accounts.
Does this sound high? It's actually lower than the statutory requirement. Under U.S. law, taxpayers who have offshore undeclared accounts can be penalized up to 50% of the value.
Overall, the IRS amnesty program still offers many tax-evading Americans a good opportunity to come clean with their offshore accounts. The added bonus is that in exchange for some penalties, you'll get to stay out of jail.