Countless years ago, it was simple to hide foreign accounts from the IRS. Since 9/11, though all that has changed is the Internal revenue service has grown much more smart in finding information. In fact, the IRS knows of countless offshore accounts but do not have the manpower to prosecute everybody for tax evasion. Due to this, the IRS has made the IRS voluntary disclosure. The penalties increase with each new version of the IRS voluntary disclosure, and the most recent version is the third. The current IRS voluntary disclosure has no end date. However, at any time these terms can change. . This is the way the program works: A taxpayer finds a tax attorney to examine the details of the case and make certain a disclosure into the IRS voluntary disclosure is correct. To be able to amend eight years of returns to include unreported income and missing FBARs, the tax attorney then has to mail a letter in to the Internal revenue service. If they are able to, the taxpayer then has to pay taxes and any interest that is due. At that point, the taxpayer has two alternatives. They could accept the 27.5enalty on the highest account value within the last 8 years by agreeing to the standard penalty structure. If the taxpayer puposely evaded taxes, this the most appropriate choice. Or, the taxpayer could elect to "opt-out" of the standard penalty structure and the taxpayer's lawyer will argue for reduced penalties. This will often come out to a 5enalty on the highest account value. Or the account could be small enough (under $75,000) where only a 12.5enalty can then be applied. Regardless of your choice, the taxpayer's lawyer will need to guarantee that they taxpayer's claimed income matches their bank account through a mini audit. If a taxpayer opt-outs and disagrees with the penalty total, the taxpayer could take an administrative appeal. Then, if the taxpayer is unsatisfied with those outcomes, they can take the case to US tax court. Hypothetically, the US Supreme Court could wind up as the final judge of the penalty amount, however that scenario is extremely unlikely. The essential thing to think about, is that as soon as the first disclosure is sent in by the taxpayers attorney and the Internal revenue service admits the taxpayer into the program, the taxpayer can stop worrying about criminal charges. The subject becomes civil. If you are thinking about this program though, you have to act quick. IF you are under audit or investigation, than you are not eligible to enter into the program. It is highly suggested that you act quickly and get more information about IRS voluntary disclosure from tax attorneys who work exclusively in offshore account disclosures.