October 5, 2009

States keep their eye on offshore accounts

Several states have joined the U.S. government in granting time-limited leniency for taxpayers who have hidden funds in offshore bank accounts.

The IRS program, sparked by a legal battle with Swiss bank UBS, has prompted more than 3,000 taxpayers to step forward to reveal their offshore holdings, USA Today reported Monday.

UBS has agreed this year to forward the names of thousands of its U.S. clients. Earlier, the bank agreed to pay $780 million in restitution to the U.S. government for helping taxpayers evade the Internal Revenue Service.

Through Oct. 15, the IRS has promised to reduce fines and not file criminal charges against taxpayers who volunteer to step forward.

Connecticut and Hawaii have also put together leniency programs. Six other states, including New York and Oregon, have offered offshore account holders programs to come clean and pay their state tax bills.

It is only a matter of time before we find these taxpayers, said Richard Nicholson, head of Connecticut's Department of Revenue Services.

Taxpayers that do not come forward ... will face the possibility of criminal prosecution in addition to civil penalties and interest on the original tax amount, he said.