Scott Michel Comments on the IRS Amnesty for Undeclared Offshore Account Holders
(Bloomberg - excerpt) - An Internal Revenue Service deadline for U.S. taxpayers holding undisclosed offshore bank accounts to qualify for reduced penalties has kept tax lawyers surprisingly busy in recent weeks.
The IRS offshore voluntary disclosure initiative is the second and likely last chance for thousands of U.S. taxpayers with hidden offshore holdings to qualify for a partial amnesty on penalties and back taxes. The deadline is Sept. 9.
"People are still coming in this morning," Mark Matthews, a Washington-based partner in Morgan Lewis & Bockius LLP, told Bloomberg Government in a telephone interview yesterday. "I wasn't expecting it."
Unlike in the earlier disclosure program, which ended Oct. 15, 2009, crowded law firm waiting rooms don't necessarily mean clients are taking advantage of this partial amnesty. The current program is less generous and that's causing some tax filers, particularly those with smaller offshore accounts, to take their chances with the IRS, some lawyers said.
"I have substantially fewer clients signing up and a much higher percentage of people who come to talk to me about this and decide not to participate," Matthews, a former IRS deputy commissioner, said in a telephone interview.
It's been a similar story at Caplin & Drysdale where several lawyers and support staff labored through the weekend of Aug. 27-28 as the remnants of Hurricane Irene lashed the Washington area, according to Scott Michel, the firm's president.
Between 350 and 400 clients made disclosures in the first program and only one third as many have come forward so far in this initiative, Michel said in a telephone interview.
‘Most Significant' Program
IRS Commissioner Douglas Shulman in February said the first 2,000 cases settled from the 2009 initiative yielded about $400 million. At least 3,000 offshore account holders came forward after the end of the first program and became part of the new initiative when it was announced on Feb. 8.
Regardless of how many people sign up by the Sept. 9 deadline, the two amnesty initiatives will be "the most significant voluntary disclosure program in the history of the United States," Caplin & Drysdale's Michel said. It's unlikely the IRS will offer another program because that would undermine the agency's credibility, he said.
"When they say, ‘Now we really mean it,' it'll be like the boy who cried ‘wolf,'" Michel said.