The Internal Revenue Service of the US, in an effort to bring more money into the public coffers, is planning to give offshore account holders a break.
It was reported that a plan is underway to reduce the penalty for those who hid overseas bank accounts. The plan is designed to get wealthy people to declare their offshore accounts in order to receive a new lower penalty.
In the plan, the I.R.S. will reduce the penalty for not filing a “Report of Foreign Bank and Financial Account”, also known as an FBAR.
The current penalty for failure to file an FBAR is fully one half of the max balance of each offshore account over the last three years. The new plan will redue that penalty to 5 to 20 percent, depending in part of the source of the funds. In addition, the IRS will make offshore account holders pay taxes and interest, and assess a penalty of 20 percent. In addition, filers must file amended tax returns for the last six years.
The plan is not amnesty, however, makes potential prosecution “less likely”.
Last year a settlement proposal for offshore bank account holders fell through at the last minute.
The new plan may do a better job of getting offshore account holders to claim because UBS, the Swiss private bank, is under pressure to give up 52,000 client names.