IRS offshore initiatives pay for 11 hours of federal spending

January 9, 2012 | FBAR Penalties, OVDI Offshore Voluntary Disclosure Initiative, Voluntary Disclosure

The US Treasury spends about 10 billion dollars a day. That works out to about $417 million dollars an hour. So, how many days of revenue did the much-hyped 2009 and 2011 Offshore Voluntary Disclosure Initiatives (OVDI) bring in? Hint: Don’t bring a calendar.

DATELINE WASHINGTON: The Internal Revenue Service today reopened the offshore voluntary disclosure program to help people hiding offshore accounts get current with their taxes and announced the collection of more than $4.4 billion so far from the two previous international programs.

Nothing against my friends in the IRS. Really not a criticism of them in particular. But how seriously can we take the so-called tax gap, when after two successful programs, both well-publicized, together, don’t even pay for half a day of federal spending?

And you thought coastal California was expensive

Maybe the IRS is doing just fine with the revenues, maybe it’s Congress with the spendy-spend.

In related news, the IRS reopened the offshore voluntary disclosure program. (which not to get too technical about, never actually closed. Because according to the Internal Revenue Manual (IRM) 9.5.11.9, a voluntary disclosure was always available post-August 31 2011 as long as neither the IRS or Department of Justice began an audit or investigation.) Unlike the 2009 and 2011 OVDIs, the just-released 2012 deal has no expiration date.

The new program will be like the 2011 OVDI except the highest penalty will move from a 25% FBAR penalty to a 27.5% FBAR penalty (The FBAR penalty is calculated on the highest aggregate balances). And like the 2011 OVDI, there is an opt-out program for taxpayers who unwillingly were in non-compliance.

Conclusion and a special dedication to Congress.

Bryon York reports that the Federal government spends a $420 million dollars a year on PBS. So there is an excellent chance that the new 2012 OVDI will pay for hours of entertainment.

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