For those who still may be out of compliance on your offshore asset reporting (perhaps on a Mexican vacation property?), the Internal Revenue Service has reopened its offshore voluntary disclosure program. The program is a successor to the Service’s 2009 Offshore Voluntary Disclosure Program ("2009 OVDP") and 2011 Offshore Voluntary Disclosure Initiative ("2011 OVDI"). This new version continues to be the least expensive way for out of compliance taxpayers to get current on their tax reporting, filing, and payments. For those who are unfamiliar with the 2009 OVDP and 2011 OVDI programs, the Service provided a uniform penalty structure for taxpayers who had failed to properly report their offshore assets. Previously, this meant that taxpayers would have to pay a penalty on the highest aggregate balance in a foreign bank account or highest value of a foreign asset at a stated percentage. In 2009, the penalty was 20%, but that percentage was increased in 2011 to 25%. The penalty under the 2012 program has increased to 27.5%. The IRS has not issued full details on the program yet, but it is expected that lower penalty rates will apply in certain limited situations similar to the past programs. To participate in the program taxpayers will have to get current with delinquent filings and pay their outstanding tax liability, including interest and accuracy-related penalties (when applicable), in addition to the uniform penalty. This may seem unfair or excessive, but the list of possible penalties applicable to these situations is extensive and can result in significantly higher penalty amounts compared to the uniform penalty (not to mention criminal charges). Those who can take advantage of the program include anyone with a foreign bank account, foreign asset, or foreign-sourced income that has been previously undisclosed to the IRS. Common situations could include inheritance of foreign stock or bank account, receipt of dividends or interest income from either, ownership of Mexican property held in a bank trust, and rental income from such a property. Considering the laundry list of penalties that can be applied if the Service discovers offshore assets through audit or other means, taxpayers are advised to take advantage of the 2012 offshore voluntary disclosure program while it is available.