Extra Time for Offshore Account Holders

The deal that Uncle Sam cut with UBS to reveal the names of nearly 4,500 offshore account holders has provided a stimulus to a government program that offers limited amnesty to taxpayers with foreign accounts. Begun last March, the program, which was scheduled to close on September 23, has been extended to October 15. The extension was made at the request of tax professionals who need more time to process a slew of foreign account holders who have come forward since the UBS deal was announced in August. More than 3,000 taxpayers have entered the program this year, compared to 88 all of last year.

Adding to the numbers of those who want to get right with the IRS is a recent wave of notices to some taxpayers that their secret account information is about to be given to the IRS. Although account holders can appeal the release of their account information in the Swiss courts, the IRS says they must notify the Justice Department that they are doing so, or risk harsher penalties. As it is, taxpayers who enter the disclosure program must pay back taxes and interest, along with a special penalty that will include a hefty part of the account balance.

Anyone who plans to come forward should get legal help, according to tax experts, and tax lawyers have been quick to welcome the chance to sign up potentially lucrative clients. There have been several radio and TV ads by tax lawyers offering to go head-to-head with the IRS on a taxpayer’s behalf. The ads offer to negotiate with the IRS over settlement terms and add a cautionary note that there’s a chance that the taxpayers could end up in jail if they don’t come forward.