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THE BANK ACCOUNT THAT CAN COME IN FROM THE COLD

Posted by Admin Posted on Feb 08 2011

The IRS is offering a second amnesty program for US taxpayers' undisclosed foreign bank accounts.

Last year, the IRS won a victory over Union Bank of Switzerland (UBS), forcing its US subsidiary to disclose the names of customers with secret accounts.  At the same time, the Service offered all taxpayers with foreign accounts an amnesty program under which taxpayers who voluntarily disclosed their accounts paid reduced penalties and avoided criminal prosecution.

In December, a former senior executive with Swiss bank Julius Baer released account records for secret accounts at that bank.  The IRS is also targeting banks in Hong Kong and Singapore, and is pushing for stronger information sharing provisions in US tax treaties.

Yesterday, the Service rolled out a second amnesty program, which will expire in August, 2011.  This follow up is not as generous as the first, but the biggest carrot is still there -- no criminal prosecution.  The amnesty is not available to taxpayers already under audit.

The amnesty requires substantial documentation, and it isn't likely the IRS will extend the August deadline. Anyone who wants to take advantage of this amnesty -- or is even thinking about it -- should start gathering documentation now.

The amnesty only applies to federal taxes.  Taxpayers who participate will still have to deal with delinquent state taxes, penalties and interest.

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