On Tuesday, November 17, 2009, the Internal Revenue Service (IRS) and U.S. Department of Justice (DOJ) released information on the highly-publicized Settlement reached with Swiss banking giant UBS AG (UBS). According to recently released information, over 14,700 U.S. taxpayers agreed to participate in the Offshore Settlement Initiative Voluntary Disclosure Program, instituted as a way for taxpayers to disclose and avoid the harshest penalties.  Further, the IRS has disclosed the criteria set forth in the “John Does” Settlement that has led UBS to turnover thousands of U.S. taxpayer clients.  The criteria serves as a guide to future investigations as the IRS and DOJ continue to investigate and prosecute U.S. taxpayers who fail to disclose their offshore assets to the U.S. government.

With the October 15, 2009 Offshore Account Voluntary Disclosure deadline fast approaching, proper reporting of foreign corporate interests and dividend disclosures has become a top IRS priority. Notably, the IRS has stepped up pressure on U.S. taxpayers to come forward and correct all failures to properly disclose their ownership interest in foreign corporations.  It’s not just a failure to file a Form TD F 90-22.1 – Report of Foreign Bank and Financial Accounts (FBARs) – that can get taxpayers in trouble.  Taxpayers are also required to disclose ownership, acquisitions and dispositions of foreign corporate stock on a Form 5471 – Information Return of U.S. Persons with Respect to Certain Foreign Corporations. 

"The IRS on September 21 announced it is extending by several weeks - from September 23 until October 15 - the filing deadline for taxpayers with offshore accounts who want to take advantage of the Service's special voluntary disclosure program."

With the September 23rd IRS offshore account voluntary disclosure initiative deadline less than one week away, U.S. authorities have been very busy negotiating agreements with other counties that will make it easier for the U.S. to identify and prosecute U.S. taxpayers hiding money and assets overseas.

Kevin Thorn of Thorn Law Group states that taxpayers with undisclosed foreign accounts should take careful notice of the IRS’s commitment of resources to a long-term strategy for pursuing unreported income and assets kept in undisclosed offshore accounts.