Update on FBARs and UBS: The Fun Begins
Author: Jacob Stein • Tags: foreign, irs, tax law • Posted on: May 12, 2010

The quagmire involving US taxpayers with unreported foreign bank accounts continues.  The latest word:  IRS has over 200 dedicated agents conducting audits of those taxpayers who voluntarily disclosed them prior to the October 15, 2009 deadline.  These agents are conducting full audits of the taxpayers who came forward (where there is smoke, there is fire, and potentially other unreported tax issues) and looking to impose fairly significant civil tax penalties.  The audits also extend to those taxpayers who voluntarily came forward following the amnesty deadline, hoping to avoid criminal sanctions.

Taxpayers who have accounts with UBS breathed a sigh of relief back in January when a Swiss court blocked the disclosure of names to the US tax authorities.  According to several in the know Swiss attorneys that I talked to, the Swiss parliament is expected to revise the US-Swiss Income Tax Treaty sometime mid-June.  The revised tax treaty (which supersedes local law) would force Swiss banks to disclose the information requested by the US Treasury.  This would mean that the names of US clients of UBS will be handed over, together with whatever other information the US Treasury requests.  Other than the names, the most critical information that the Treasury may request will be on sources of any incoming wires and destination of outgoing transfers.  Many UBS clients rushed to move their money out of UBS last year, to other banks.  The US Treasury may now move to uncover that information and to go after those recipient banks.

For many US taxpayers, the money they have accumulated in their offshore accounts represents their lifetime savings.  It now appears that they may have to make a choice between staying out of jail and surrendering all that money to the US government.  An extraordinarily difficult decision to make.

It is possible that, that some of these taxpayers could make their offshore funds unreachable by the US Treasury, but they would then need to carefully craft a strategy that would aim to avoid criminal tax penalties.   We strongly encourage you to consult an attorney before you commit to any course of action.

Latest Video Bob Klueger Estate Tax Law Video Bob Klueger talks about the effects of the new tax law.
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RobbReport.com speaks with asset protection specialist Jacob Stein of Klueger & Stein, LLP in Los Angeles about the importance of protecting valuable assets, such as your private residence, rental real estate, investments and retirement plans.