Thursday, November 12, 2009

States Offer Tax Evaders with Offshore Accounts a Deal

The Federal governments popular taxpayer amnesty program has allowed hundreds of Americans with offshore accounts come forward and avoid criminal prosecution and/or excessive monetary penalties. After seeing the success of the Federal program, some states – including Connecticut, New York and Hawaii – are offering similar programs as well. You can find a segment of a USA Today article on this new development below.

The IRS isn't the only government agency urging Americans with secret offshore bank accounts to disclose their holdings and pay overdue taxes. Several states have begun similar efforts.

More than 3,000 offshore account owners have applied for an IRS voluntary disclosure program since it began in March, lured by reduced fines and the prospect of avoiding criminal charges.

The IRS started the program amid what proved to be a successful federal court battle to force Swiss banking giant UBS to turn over the names of thousands of Americans with undeclared accounts. UBS recently began notifying American clients their names would be disclosed.

As the Oct. 15 application deadline for federal leniency nears, Connecticut and Hawaii are mounting efforts modeled on the IRS program. Oregon, New York and at least four other states have disclosure programs or amnesties that are open to offshore-account owners.

"It is only a matter of time before we find these taxpayers," said Richard Nicholson, head of Connecticut's Department of Revenue Services, as he announced its program last week.

That's because income-tax-return adjustments and other data the IRS develops under its program may be shared with local tax counterparts, said IRS spokesman Bruce Friedland. The state efforts could get that data faster — and generate tax revenue at a time of budget shortfalls.

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