This is arguably a prelude to the massive tax increases about to befall upper middle class and 'rich' Americans in 2012 ... and expansion of IRS investigative staff to nearly double today's level under provisions of the ObamaCare law.


(snip)The I.R.S. created the latest program amid a widening crackdown by federal authorities on offshore accounts sold to wealthy Americans by Swiss and Swiss-style banks. The crackdown, which began with the Swiss giant UBS, has since spread to other banks, including HSBC, smaller Swiss cantonal banks and Swiss-style banks in Asia.

Mr. Shulman said that “we now have a number of other banks under investigation based on information we received from our first round of disclosures” in the earlier amnesty program, two years ago, “and from other sources.” He added that the investigations “are at various stages, but some are quite advanced.”

The previous program required extensive disclosures about the network of banks, financial advisers, trust executives and other intermediaries involved in helping to hide a client’s money offshore. The authorities are “data-mining” those roadmaps to further root out tax cheats. While it is legal for Americans to own foreign banks accounts, not declaring their contents to the I.R.S. constitutes tax evasion.

The new program requires individuals to pay a penalty of 25 percent of the amount in their foreign bank accounts in the year with the highest aggregate account balance over eight years from 2003 through 2010.

Normally, a taxpayer would pay a 50 percent penalty on the highest amount in each account for each year over six years — a level that can easily leave the taxpayer owing more than is in the accounts — in addition to the back taxes, interest and possible criminal penalties.

Under the new program, some taxpayers may be eligible for reduced penalties of 5 percent or 12.5 percent. Anyone entering the program must also pay back taxes and interest for up to eight years, as well as delinquency and accuracy-related penalties.

The program is tougher than one created in 2009, which attracted 15,000 Americans with hidden accounts overseas and stunned I.R.S. officials, who Mr. Shulman said had expected around 1,000 participants. Some 3,000 additional Americans had come forward since the October 2009 deadline of the previous program.

Americans with smaller offshore accounts holding no more than $75,000 in any year covered by the program are eligible for a penalty category of 12.5 percent. Mr. Shulman said that new penalty was aimed at people who had inherited Swiss-style bank accounts.

Under the previous program, taxpayers who came forward before Oct. 15, 2009, were subject to a reduced penalty of 5 percent or 20 percent, depending in part on whether their wealth had been inherited. They were also subject only to a single penalty, on the highest balance in their affected accounts over the previous six years, instead of one for each year.

Without the terms of either program, those who come forward can be left owing the I.R.S. a multiple of what their accounts hold. Another twist is that under the latest program, account holders must file all their documents and tax returns before the Aug. 31 deadline and not just indicate that they want to participate in the program. That “will create a real problem for people who are unable to get information from their foreign banks and then have it processed that quickly,” said Scott D. Michel, a tax lawyer at Caplin & Drysdale in Washington.

Robert Katzberg, a white-collar criminal defense lawyer in New York with private banking clients, called the new program “probably the last, best chance to get out from under.”

“Ultimately,” he added, “there will be no place to hide. This is no longer just about UBS. The investigation is not confined to the Alpine region. Banks in the Mideast and Far East are under scrutiny.” (snip)




To summarize briefly, since 2009 the US gov't policy toward tax avoidance by high earners has been to push the door closed on 'foreign' options ... partially by 'threat' of IRS investgation of those Americans but in reality by imposing new regulations on all foreign banks with US branches. The result of this has been that, with the exception of the 'uber rich', foreign banks will no longer accept new accounts opened by Americans.
However, this still left open the option of foreign accounts for those Americans who already had them !!

This new round of 'threat' is intended to slam the door closed on foreign bank accounts. As such, the legal options for tax avoidance will essentially be confined to investing in US tax free muni bonds, investing in US 'green energy' partnerships etc. ... which is precisely where the gov't needs their money to flow to !!!