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Monday, July 20, 2009

WSJ: IRS Uses FBAR to Get Tougher on Offshore Tax Evaders

Wall Street Journal:  IRS Gets Tougher on Offshore Tax Evaders, by Laura Sanders:

The IRS has stepped up scrutiny of offshore accounts and foreign income, an enforcement campaign that could sweep up tens of thousands of taxpayers. ... The IRS is using a once-obscure tax form called the Foreign Bank Account Report, or FBAR, to force taxpayers to provide information on income they earn or bank accounts they hold overseas.

It is threatening tough action against taxpayers who don't file the form and has greatly broadened those subject to filings beyond direct owners of offshore accounts. The requirement applies to U.S. citizens and residents who have offshore accounts totaling $10,000 at any point during the year.

This spring, the IRS announced a Voluntary Disclosure program for people who haven't been paying taxes on overseas income. The agency warned that those who don't confess by Sept. 23 will be hit with far bigger penalties. Recently, the IRS has been asking for face-to-face interviews with many who have come forward.

In June, the agency announced that the filing requirements apply to investors in offshore hedge and mutual funds. That caused a backlash, and the IRS agreed to delay the deadline for filing this year's form to Sept. 23 from the normal due date of June 30. Now, tax lawyers and accountants say they are being deluged by taxpayers with overseas holdings, worried they will face civil penalties -- or even criminal charges.

For more, see:

http://taxprof.typepad.com/taxprof_blog/2009/07/wsj-irs-gets.html

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