November 20, 2009

What Offshore Bank Accountholders Must Do

Now that the IRS and UBS bank of Switzerland have settled their feud, it is time to understand exactly what their settlement entails and how it affects you. If you are an American with an offshore bank account whether in Switzerland or any other country, you need to listen up.

This is what the actual settlement is. The US government has entered into 2 agreements, one with the Swiss government and the other with UBS bank. Under the agreements, the US government will submit a request to the Swiss government asking it to obtain information on a certain type of bank account in UBS in accordance with the US Swiss Tax Treaty. When the Swiss government receives the request, it will in turn direct UBS to forward such bank accounts and notify the respective account holders that their accounts will be included in the tax treaty with the US. These notices will be sent progressively over the coming weeks, stretching over a few months.

Should you receive such a notification from UBS, you may opt to participate in the IRS' Voluntary Disclosure program in which you declare your assets in UBS to the IRS for tax purposes. On March 23rd, the IRS put in place a special penalty framework applicable to those who voluntarily declare their assets held in offshore accounts under the Voluntary Disclosure program. You will have to pay any taxes due plus penalties and interest charges calculated according to the special penalty framework, but you will avoid criminal prosecution for tax evasion.

Should you choose to participate in the Voluntary Disclosure program, you must comply with three conditions. Firstly, you must make your declaration before the IRS discovers that you may have been evading taxes on your offshore assets. Secondly you must make your declaration before September 23rd and finally, you must do so before the Swiss government reveals your banking details to the US government who will in turn hand it over to the IRS.

According to information, UBS will reveal 4,450 accounts of American depositors who are suspected of tax evasion. These 4,450 accounts are of various types including but not limited to bank-only accounts, accounts containing securities and other investments and offshore company-nominee accounts that are used by an individual who holds indirect beneficial ownership.

This would apply to you even if your offshore account is not with UBS but with another Swiss bank. The Tax Treaty between the US and Swiss governments authorizes the US to request the same information from the Swiss government of other banks in Switzerland.

So if you have not been paying taxes on your offshore assets, now is the time to make things right by paying your dues.

Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 1-888-GET-MISH.