Money Laundering, Terrorism & Financial Institutions
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USA PATRIOT ACT MONITOR NEWS RELEASES

SA PATRIOT Act Monitor News Release: Offshore Voluntary Compliance Initiative

Offshore Voluntary Compliance Initiative Procedures Detailed by IRS

The IRS has announced an Offshore Voluntary Compliance Initiative in Revenue Procedure 2003-11 (attached to News Release IR 2003-5 (1/14/2003)), which allows taxpayers to avoid some of the penalties arising from use of offshore payment cards (credit, debit, or charge cards) issued by banks in foreign jurisdictions or through offshore financial arrangements. The Procedure is effective January 14, 2003. The broad swath of information that must be provided to the IRS in order to participate in the Initiative may deter many from participating. The Financial Crimes Enforcement Network (FinCEN) will not impose civil penalties for failure to timely file a Report of Foreign Bank and Financial Accounts ("FBAR," TD F 90-22.1) on participants. Taxpayers wishing to participate in the Initiative must, by April 15, 2003, send a written request to participate in it as follows:

By US Postal Service to:
National Offshore Voluntary Compliance Initiative Coordinator
P.O. Box 480
Bensalem PA 19020

By private delivery service to:
National Offshore Voluntary Compliance Initiative Coordinator
Attn: DP S 6005
11601 Roosevelt Blvd.
Philadelphia PA 19154

By email to:
VCI@irs.gov

The application is to include the following concerning the taxpayer's introduction to offshore payment cards and offshore financial arrangements:

1. Names, addresses, and telephone numbers of any parties who promoted or solicited the taxpayer's use of offshore payment cards or offshore financial arrangements;
2. If known to the taxpayer, the names, addresses, and telephone numbers of any parties who advised or assisted the promoters or solicitors in marketing offshore payment cards or offshore financial arrangements; and
3. All promotional materials, transactional materials, and other related correspondence and documentation that the taxpayer at any time received regarding offshore payment cards or offshore financial arrangements.

Taxpayers who have derived income from illegal sources during the years on which they seek participation are excluded. Though drug trafficking is specifically mentioned in this connection, presumably money laundering would also preclude participation, even if the offshore accounts were not used for the money laundering. If the taxpayer used the offshore arrangements "to support or, in any way, facilitate illegal activities not related to taxes," this will also preclude participation.
More details concerning the Procedure will be included in the USA PATRIOT Act Monitor.


 

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