IRS offers incentives to holders of offshore assets

The Internal Revenue Service (IRS) has announced it will offer leniency to Americans who come forward with assets invested in offshore accounts.

The agency unveiled a plan last month to lower the 50 percent penalty levied on offshore account holders. It also said volunteers will avoid prosecution provided their money has not come from criminal activities, according to the Wall Street Journal.

In addition to that, "the IRS is clearly interested in information about bankers, financial advisers, lawyers and intermediaries," says Scott D. Michel, a lawyer at Caplin & Drysdale, quoted by WSJ.

"Lawyers who go in for voluntary disclosures are being asked to identify any such people with whom their clients interacted," he adds.
However, Bob Bauman, in his blog written for Sovereign Society, warns the government’s move may be "a trap."

He points out the requirement that the government present hard evidence of tax avoidance when asking banks for disclosure of offshore activities, and stresses the "illogical" approach that assumes everyone with an offshore account is a tax evader.

That is because under the U.S. law opening an offshore bank account is completely legal so long as it is reported, he adds.

In conclusion, Bauman, citing opinions of tax experts, cautions that volunteers can still be prosecuted under the proposed "amnesty" and that those who want to come forward should consult a lawyer before contacting the IRS.