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2012 Offshore Voluntary Disclosure Initiative Objectives

The IRS has been completely reorganized around the perception that a large portion of the tax gap, the difference between tax dollars collected and the estimate of the actual tax dollars that should be collected given total compliance with tax law is caused by offshore tax shelters and evasion strategies. The objective of the IRS is to increase disclosure of foreign accounts and entities and purposeful or merely negligent tax evasion by taxpayers. In addition, the IRS seeks to intensify its review of compliance with IRS regulations based on the ever increasing civil and criminal risk of non-disclosure by taxpayers. For example the 2011 form 8938 increases the risk of non-compliance because it places for the first time an affirmative act of reporting foreign accounts and assets directly within the personal tax return.