MORE REASONS TO CONSIDER SECOND IRS OFFSHORE VOLUNTARY DISCLOSURE INITIATIVE (2011 OVDI)

1.  The Wall Street Journal reports that Switzerland intends to make it easier for foreign governments to track down tax cheats hiding funds.  The Swiss Finance Ministry will now provide information if the requesting tax authority provides merely the bank-account number (often  discovered from movements of money) or some other identifier such as a Social Security Number or credit card information.  This policy departs from the Swiss position of demanding detailed bank account identifiers including name and address of the account holder. This more lenient disclosure policy is on top of the Swiss already having agreed to eliminate the distinction between tax evasion and tax fraud as a barrier to cooperation.  The Swiss will continue to resist mere “fishing expeditions” but this change in policy is yet another chink in the amour of foreign bank secrecy.

2.  IRS informants now have a statutory right under IRC Section 7623 (enacted in the Tax Relief and health Care Act of 2006)to a fixed reward amount for blowing the whistle on suspected tax cheats and this has sparked a cottage industry in Whistleblower claims.  The IRS has set up a Whistleblower Office and Informants Claims Unit (ICE) in its Compliance Center at Ogden Utah.  Rewards can range from 15% to 30% of the collected tax, penalty and interest for disputed amounts over $2 million. Lower awards are provided for lesser amounts in dispute.  There are other limitations and requirements but a disputed reward amount can be appealed to the U.S. Tax Court  Claims can be filed on Form 211, Application for Award for Original Information. More information is available on IRS.gov. 

3. The U.S. on February 23, 2011 charged four former Credit Suisse bankers with aiding wealthy U.S. citizens evade taxes.  These latest non-UBS AG indictments reveal how the IRS and Department of Justice are reviewing information provided by the 15,000 first wave of OVDP participants who came in from the cold under the 2009 Offshore Voluntary Disclosure Program. Undoubtedly, this is the tip of the iceberg regarding Swiss accounts. How many indictments will follow involving accounts in other countries remains to be seen.  But, to be foretold is to be forewarned.  The grim tax reaper is coming for you if you still have a financial interest in an undisclosed foreign financial account or signature authority over such an account.

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