Orange County tax lawyers noted that when the Swiss Parliament overturned that country's long tradition of bank secrecy in June, it ended years of wrangling between Switzerland and the U.S. over the UBS accounts that prompted the action. Now that the Swiss have taken this action, many people have questions about the consequences.
Who is affected by the Swiss Parliament's action? For the time being, only about 4500 UBS account holders. But in the future, the IRS will have more power to ask Swiss banks to identify possible tax evaders.
What are the criteria for disclosure of names of account holders? The most important is direct ownership of an account worth at least one million Swiss francs between 2001 and 2008.
Will all UBS account holders' names who meet the criteria be released?
No. No U.S. taxpayer living abroad permanently will not be identified. Others may also not be identified.
Is the IRS only going after U.S. taxpayers with Swiss bank accounts? No. Other locations being targeted include Hong Kong, Beijing and Panama City.
Does the IRS have a way for taxpayers to come forward? Yes. There was a limited amnesty last year for 15,000 who came forward. But still, the terms are harsh. Those who came forward before lost around 40% of their accounts. Those who come forward now may lose 60%.
What forms must U.S. taxpayers with offshore accounts file? Form TD F 90-22.1 must be filed by any U.S. taxpayer with more than $10,000 in any offshore account at any time during a year. This could include a student studying abroad and even their parents if all hold a foreign bank account. The penalty for willful failure to file is $100,000 or half the account's value, per year. Nonwillful failures face a penalty of $10,000 per year. The forms are paper and must be received, not mailed, by June 30 at an IRS office or a special Detroit address.
- Source: Wall Street Journal "Getting Out of Dodge: The IRS and Offshore Accounts" June 26, 2010