Tax cheats: Fess up without going to jail

NEW YORK (CNNMoney) -- Tax cheats hiding money offshore have until the end of August to fess up if they want Uncle Sam to take it easy on them.

The IRS announced on Tuesday that it would give taxpayers a reduction in penalties -- and no jail time -- if they fess up to any undisclosed overseas accounts by Aug. 31.

"This new effort gives those hiding money in foreign accounts a tough, fair way to resolve their tax problems once and for all," said IRS Commissioner Doug Shulman in a prepared statement. "And it gives people a chance to come in before we find them."

Tax evaders will face a penalty of up to 25% of the highest annual account balance going back to 2003, though some taxpayers will be able to receive a penalty of as little as 5% depending on the size of the account.

The program also requires tax evaders to fork over back taxes, interest and late charges for up to eight years.

This is the IRS's second voluntary attempt at this program. In 2009 it reeled in 15,000 taxpayers with undisclosed overseas accounts at banks in more than 60 countries.

Penalties under the new initiative are higher than they were during the 2009 program so that people who waited to fess up aren't rewarded. However, Schulman said that as the IRS continues to invest more resources in cracking down on these illegal offshore accounts, this is the time to come forward.

"The situation will just get worse in the months ahead for those hiding assets and income offshore," he said. "This new disclosure initiative is the last, best chance for people to get back into the system."