By Amy Feldman
NEW YORK | Mon Jan 28, 2013 3:25pm EST
(Reuters) – When Andrew Winfield applied to become a U.S. citizen in 2011, he realized he owed taxes on accounts he had left behind in his native England.
So he paid what he believed he owed — $2,800 in back taxes, plus the estimated interest and penalties – and entered the U.S. Internal Revenue Service’s overseas disclosure program.
But when the IRS assessed its penalty in November, Winfield was stunned to learn that it would be $28,000 — 10 times the amount of tax he owed from 2003 to 2010.
“My first reaction was: ‘There’s no way in hell I’m going to pay that,’” the 39-year-old Wake Forest, North Carolina, resident says. “It’s kind of crazy when you look at the numbers and compare the penalty to the $2,800 (in back taxes) due.”
The IRS has been aggressively seeking out taxpayers with offshore assets, asking them to come in on their own to avoid further prosecution and requiring foreign financial institutions to send information about American accounts.
But the voluntary disclosure programs have lumped together overseas Americans and immigrants with relatively small accounts and those trying to evade taxes by putting their money offshore….