The third offshore program comes as the IRS continues working on a wide range of international tax issues, particularly in the area of compliance, and will remain open for an indefinite period until otherwise announced.

Opinion is divided on whether such amnesty schemes achieve higher rates of tax compliance among those with offshore financial arrangements. However, the bottom line for the IRS is that the two previous schemes, which closed in 2009 and 2011 respectively, resulted in an additional USD4.4bn in tax being collected by the agency, and given Congress's failure to address the federal deficit and debt, these revenues will surely be welcomed by the Treasury Department.

The new program is similar to the 2011 program, but with a few key differences. Unlike last year, there is no set deadline for people to apply. However, the IRS has warned that the terms of the program could change at any time going forward, and that penalties in the program may increase for all or some taxpayers or defined classes of taxpayers. The agency could also decide to end the program entirely at any point.

The third offshore scheme comes as IRS Commissioner Doug Shulman also announced that the IRS has collected USD3.4bn so far from people who participated in the 2009 offshore program, reflecting closures of about 95% of the cases from the 2009 program. On top of that, the IRS has collected an additional USD1bn from up front payments required under the 2011 program. That number is expected to grow as the IRS processes the 2011 cases.

In all, the IRS has seen 33,000 voluntary disclosures from the 2009 and 2011 offshore initiatives. Those who have come forward since the 2011 program closed last year will be able to be treated under the provisions of the new OVDP program.

The overall penalty structure for the new program is the same for 2011, except for taxpayers in the highest penalty category.

For the new program, the penalty framework requires individuals to pay a penalty of 27.5% of the highest aggregate balance in foreign bank accounts/entities or value of foreign assets during the eight full tax years prior to the disclosure. That is up from 25% in the 2011 program. Some taxpayers will be eligible for 5 or 12.5% penalties; these remain the same in the new program as in 2011.

Participants must file all original and amended tax returns and include payment for back-taxes and interest for up to eight years as well as paying accuracy-related and/or delinquency penalties.

Smaller offshore accounts will face a 12.5% penalty. People whose offshore accounts or assets did not surpass USD75,000 in any calendar year covered by the new OVDP will qualify for this lower rate.