US Tax Amnesty Reveals 7,500 Undeclared Offshore Accounts

Tom Burroughes

15 October 2009

The US tax authority is widening the search for undeclared offshore assets, setting up offices around the world as it emerged that more than 7,500 US citizens have disclosed accounts, media reports said.

Today marks the end of the voluntary disclosure programme that has been operated by the Internal Revenue Service – extended from 23 September – that has been used by the IRS to persuade people to come forward and thereby suffer reduced penalties.

Bloomberg quoted Internal Revenue Commissioner Douglas Shulman as saying that people have revealed accounts ranging in value from $10,000 to more than $100 million. The partial amnesty will not be extended, he said.

The US, along with countries such as Germany, France and the UK, has waged an increasingly vocal campaign against so-called tax havens, targeting jurisdictions such as Switzerland and Liechtenstein. The Group of 20 major industrialised nations have agreed to impose sanctions against countries that are deemed not to co-operate in divulging information about tax dodgers. Bankers in Switzerland have complained that the actions of countries such as the US are hypocritical, since they operate tax havens themselves. The Washington-based think tank, the Cato Institute, has also argued that G20 countries are trying to rig global tax rates by creating a tax “cartel”.

The case of UBS, the Swiss bank, has in particular played a role in highlighting some of the issues. In August, Switzerland agreed to hand over data to the US on as many as 4,450 UBS accounts to settle a lawsuit. Initially, the US had sought as many as 52,000 accounts. UBS no longer provides offshore banking services in the US.

“We’re going to be scouring the 7,500 disclosures to identify financial institutions, advisors and others” who helped taxpayers skirt their obligations, Mr Shulman was quoted by the news agency as saying. He pointed out that the issue went far beyond UBS and Switzerland.

Details on the total size of assets disclosed as a result of the IRS partial amnesty were unclear. WealthBriefing was unable to reach the IRS for elaboration at the time of publication.

As part of its efforts, the IRS also intends to hire more than 800 new employees in the next year and add staff to eight existing overseas offices, including Hong Kong and Barbados, reports said.