Offshore Banking Update
The IRS has established an amnesty program for taxpayers who have not paid taxes on foreign accounts. Taxpayers who contact the IRS by Sept. 23 could avoid criminal prosecution but still must pay all back taxes, plus interest and penalties. Note: this deadline has been extended to Oct. 15.
The Swiss government has agreed to a settlement under which the Swiss bank UBS will turn over to the IRS the names of about 4,450 accounts held by Americans. The IRS claims that UBS holds about 52,000 such accounts, and of these the 4,450 are those most likely to involve tax evasion.
The settlement calls for UBS to hand over names gradually to the IRS through a review panel set up by the Swiss tax authority. UBS plans to notify account holders that their names are being turned over. The deal is supposed to discourage tax evasion.
Note: All U.S. citizens and permanent residents are required to disclose and pay taxes on their worldwide income, regardless of the source. The IRS usually gives a credit for taxes paid to a foreign government.