Fueled by a crackdown on the use of overseas bank accounts as tax havens, about 7,500 American’s have voluntarily disclosed such accounts to the Internal Revenue Service and agreed to pay back taxes and penalties.
The tax agency agreed not to pursue criminal charges against those people who apply for the amnesty program and voluntarily disclose their overseas accounts. Those taxpayers still face substantial financial penalties.
Interest in the amnesty program intensified in recent months after Switzerland’s largest bank, UBS, agreed to disclose the names of about 4,450 U.S. account holders as part of an agreement to resolve a criminal investigation by the U.S. government.
Combined with the voluntary disclosures, the IRS could soon have as many as 11,000 open investigations of individuals with overseas accounts.
Those who voluntarily stepped forward had accounts in 70 countries and on every continent except Antarctica. Balances of newly disclosed accounts range from about $10,000 to more than $100 million according to the IRS.
Many of the people who applied for the program also provided information about overseas investment advisors who marketed their banks as avenues to avoid paying taxes in the United States and helped individuals set up overseas corporations to further insulate their wealth from the IRS.
In the coming months and next several years IRS are going to move aggressively. Agents have noticed funds flowing out of Europe and into Asia, Central America and the Caribbean.
As part of the crackdown, the IRS is establishing criminal investigation offices in Beijing, Panama City and Sydney, Australia. It already has offices in eight international cities, including London, Hong Kong and Frankfurt, Germany.
The Obama administration’s 2010 budget proposal includes funding for 800 additional IRS agents, attorneys and economists to assist in the crackdown on overseas tax havens.
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