On Feb. 8, 2011, the Internal Revenue Service announced the terms of the latest in a series of “last-chance” programs designed to encourage non-compliant taxpayers to disclose secret foreign bank accounts.1 The new program, labeled the Offshore Voluntary Disclosure Initiative (OVDI)—distinguishing it from its most recent predecessor, the 2009 Offshore Voluntary Disclosure Program (OVDP)—offers taxpayers an opportunity to avoid criminal prosecution by curing past tax deficiencies and paying significant civil penalties by Aug. 31, 2011.2
About 14,700 taxpayers made voluntary disclosures under the OVDP regime,3 which was perceived as a great success for the IRS. However, many eligible taxpayers did not participate in the OVDP,4 and since the program’s close on Oct. 15, 2009, nearly 3,000 offshore account holders have come forward under the IRS’s long-standing Voluntary Disclosure policy.5 Some of these latecomers may have come forward to alleviate pangs of conscience; many others likely did so because their offshore accounts were about to be disclosed to the IRS.
