Taxation & Estate Planning

?What the USA Amnesty does for your Offshore Accounts

By Darrin Mish

It is almost an open secret that tax havens like Switzerland are where the rich stash their cash to avoid taxes. Nothing much has been done to pursue this matter until now. But recently, the IRS has announced a type of amnesty program that allows people to voluntarily disclose their offshore assets in exchange for a reduced penalty and avoidance of criminal charges. This USA amnesty policy is called the Voluntary Disclosure program. Here is a general outline of what this policy says and how it affects your bottom line.

As the name suggests, under this USA amnesty you must disclose the details of your offshore bank accounts voluntarily. In the meantime, the IRS has been investigating. Recently they struck a deal with one of the major Swiss banks, UBS bank, to obtain information on thousands of their American account holders suspected of dodging taxes. If the IRS gets to you before you make your disclosure, you get no amnesty at all. This amnesty program is to reward those willing to be honest, not to help those that have already been caught. The intention of this program is to ensure American taxpayers are upfront with their assets and pay taxes on them.

Under this Voluntary Disclosure program, the amount of penalty that you will face is greatly reduced. Instead of docking you all of your offshore assets, back taxes and imposing penalties on you, the IRS in most cases will only take 10% of your total assets, plus all of your back taxes. This would be a welcome reduction from 100%.

The IRS has been doing its best to rope in wealthy Americans who maintain offshore accounts to avoid taxes. While the IRS themselves have no authority whatsoever on other countries' banks, they can affect the world business stage by working with the White House or other branches of government to make life a bit more difficult for banks that aren't playing by the IRS rules. This amnesty period is certainly not going to last forever. Nonetheless, there are still many who venture to take their chances in not getting caught. Whether it is taking 10 percent or 100 percent, people can still leave their money in Switzerland or some other place and not have to worry about taxes at all. Even with USA amnesty, offshore accounts sound safer offshore than they do in the hands of the IRS.

?What the USA Amnesty does for your Offshore Accounts is a post from: IRS Tax Problem Solver Blog - IRS Help

Full post as published by IRS Problem Solver Blog on February 15, 2010 (boomark / email).