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IRS Plans To Offer Less Generous Offshore Account Amnesty

Last fall, the Internal Revenue Service offered an amnesty for Americans with secret offshore bank accounts to come forward and pay the taxes owed on the money held abroad. For account holders who did not come forward and later regretted it, the IRS is planning to announce a new amnesty program soon.

The previous program allowed offshore bank account holders who came forward to pay a reduced penalty of 5% to 20%, which depended on whether or not the wealth was inherited. The penalty was also assessed just once, based on the highest balance in the accounts over the previous six years. Otherwise, they could have had a penalty for each of the six years, which could drain the accounts completely.

The terms of the new amnesty are not expected to be as generous as those offered last fall.

Last fall's amnesty came in the midst of a crackdown on Americans using Swiss bank accounts to evade American taxes. The federal government also took action directly against Swiss banks, including Swiss banking giant UBS. A settlement with UBS led the bank to reveal the names of some American account holders.

Fifteen thousand people came forward in the previous amnesty before the deadline. An additional three thousand came forward after the October 15th deadline that year.

The previous so-called voluntary disclosure program, which ended last October and was carried out amid a crackdown on Swiss private banks and their clients who hid money from the government, was used by more than 15,000 Americans with hidden accounts, some holding hundreds of millions of dollars. An additional 3,000 with accounts at various offshore banks came forward after the Oct. 15 deadline.

Source: New York Times "A 2nd I.R.S. Amnesty for Offshore Accounts" 1/24/2011

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