The IRS today announced that it was extending the deadline to Oct. 15 for reporting offshore accounts without incurring criminal prosecution and the severest fine. See IR-2009-084.
Before today's reprieve, taxpayers would have had to file by Wednesday (Sept. 23) to reveal their hidden accounts and enjoy the lesser sanction of the administrative voluntary disclosure program. Under the program, the government limits its remedies to 20% of the peak balance in the account over the last 6 years, and perhaps only 5% if the account has been inactive. The law permits much more severe sanctions--taxpayers could end up paying 50% of the account balance each year that the report is not filed. Criminal prosecution is also a possibility in cases of tax fraud.
The release indicates that the Service has received "repeated requests" from tax advisers saying that they need more time to be able to talk with clients and prepare forms:
By extending the deadline for a short period of time, the IRS Iss providing relief for thos taxpayers who had intended to come forward prior to the deadline, but faced logistical and administrative challenges in meeting it.
Bloomberg reports that practitioners are seeing a big influx of interest after the announcement that UBS will give information on more than 4000 additional accounts.
Paul Behling, a partner in a New Haven firm said that "[t]he number of people coming through and talking to me about it has dramatically increased in the last couple of weeks. ... They're concerned they'll be discovered." Donmoyer, IRS to Extend Leniency for UBS Offshore Disclosers, Bloomberg.com (Sept. 21, 2009).
This appears to be a final deadline. The Service announced that "there will be no further extensions." (But note the comment by another practitioner, Lawrence Horn, that the IRS should extend the program through the end of the year. See Donmoyer story, above.)
So you folks who had sequestered your millions in some corporation set up by UBS in the Caymans or otherwise hidden your income, now's the time to come clean. Personally, I wouldn't mind at all if you are caught redhanded when the Swiss hand over your account and name to the US and you have to pay a fine of, say, 200% of the amount in the account as well as face criminal prosecution. You'd make a good "crime doesn't pay" poster boy (or girl). For it is a crime, you know, to hide your income and evade taxes. Maybe you could claim you didn't know of your reporting responsibility, but I really would hate to be the defense attorney looking at a jury and hoping to convince them that you really didn't "know" what you were doing when you met with a Swiss banker here under subterfuge and arranged for a fortune and its earnings to be socked away in an island corporation under somebody else's name. ...
Bloomberg.com notes that UBS declined to comment on the extension.
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