There’s no deadline under the new Offshore Voluntary Disclosure Program, although the IRS says it reserves the right to cancel it at any time.
The U.S. Internal Revenue Service has launched a permanent amnesty program for Americans "hiding" money offshore.
After recovering $4.4-billion (U.S.) in taxes and fees since 2008 in two previous amnesties, U.S. authorities say many more Americans are eager to come clean.
"We have billions of dollars in hand from our previous efforts, and we have more people wanting to come in and get right with the government," IRS commissioner Doug Shulman said in a statement.
The most recent amnesty program expired in September, sparking concern among the roughly one million Americans living in Canada, many of whom have not filed U.S. taxes and other reporting requirements for years.
There's no deadline under the new Offshore Voluntary Disclosure Program, although the IRS says it reserves the right to cancel it at any time.
"It makes sense for the Americans to have a permanent amnesty program," explained Kevyn Nightingale, a U.S. tax specialist with MNP LLP in Toronto. "Bringing them in is better than keeping them out there and afraid."
Coming clean, however, doesn't come cheap. To avoid possible prosecution, taxpayers must pay a penalty of up to 27.5 per cent on the highest balance in their accounts during the last eight years, plus any back taxes and interest owing.
Many Americans living in Canada, however, may be eligible for a reduced penalty as low as 5 per cent, as long as they are up date with their Canadian taxes.
"I'm going to see a steady stream of people coming in," Mr. Nightingale said of the new amnesty.
Even so, he said many individuals who owe no tax are still opting to simply start filing with the IRS going forward, ignoring earlier years and assuming that the risk is low of being targeted by U.S. authorities. "It's the hope-and-pray approach," he added.
The IRS has also disclosed that it's developing special procedures that would allow delinquent filers to comply with their obligations, but offered no details.
In December, U.S. Ambassador to Canada David Jacobson said the Obama administration is willing to waive penalties for individuals, including dual Canadian-Americans, who file their back taxes and other disclosure forms, and don't owe U.S. taxes.
Failure to file so-called Foreign Bank Account Reports can result in penalties of $10,000 (U.S.) a year for every account – fines that can quickly reach hundreds of thousands of dollars. In some extreme cases, the IRS can seize up to half the contents of accounts.
Many Americans living in Canada insist they were unaware until recently that they were required to file these forms every year.