Tags: denis | kleinfeld | Full-Force | Crackdown | Foreign | Accounts

A Full-Force Crackdown on Foreign Accounts

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Monday, 09 May 2011 07:56 AM Current | Bio | Archive

The Financial Crimes Enforcement Network, known a FinCEN, issued its Final Rule that amends the Bank Secrecy Act (BSA), which in turn implements regulations on the FBAR form (Foreign Bank and Financial Accounts) that is used by taxpayers to report their foreign accounts. In other words, more complexity if you want to have a foreign account.

Although the original BSA provisions have been around since 1972, it has been only in the last number of years that the Treasury has really gone after undeclared foreign accounts. According to Congress and the administration, there is $100 billion of tax that can be collected. And they want it.

The Treasury has issued a new FBAR form (form 90-22.1) that you file by June 30. What is a reportable foreign account is a difficult question in a lot of cases since the passage of the Foreign Account Compliance Tax Compliance Act as part of the new healthcare law.

This is an area of tax law that not many, if not most, accountants and tax lawyers usually deal with.

The consequences are extremely serious as the government is pulling out all the stops to go after undeclared money and other things that are considered like money. This could include even offshore insurance contracts or gold bullion.

Just a few weeks ago, the Justice Department filed suit against HSBC in India because it wants the names of Americans who may be hiding money in undeclared accounts.

That action comes on the heels of the recent indictment of four Swiss bankers from Credit Suisse and the arrest of a Credit Suisse banker when he tried to come into the United States to see some U.S. clients.

It just shows that the U.S. government will use both civil and criminal law to get at U.S. taxpayers, including multi-national corporations, who think they can evade tax by holding funds and other things of value in foreign accounts.

For a limited time, the IRS has an amnesty program in place to allow taxpayers to effectively "come clean" and avoid criminal prosecution. It may be costly, but it is better than spending time in the government's Graybar Hotel.

Obviously, there are unintended consequences from this crackdown. I am not implying that tax evasion is to be an accepted practice, but the reality is that the methods used by the U.S. government are impacting our national economics and foreign relationships quite negatively.

The United States needs capital. Without capital there is no capitalism.

A significant part of capital used in the United States comes from foreign sources. It seems that there are an awful lot of foreign bankers, financial institutions, and investors who just don’t want to take a chance on being exposed to liability in the United States. They would rather invest elsewhere, like China, India and other developing nations which have a more encouraging investment environment.

The U.S. policy is that offshore accounts represent a serious problem of noncompliance with paying U.S. tax. The United States wants compliance with its tax law. Regardless of consequences, the crackdown on foreign accounts goes on full force.

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Kleinfeld
The Financial Crimes Enforcement Network, known a FinCEN, issued its Final Rule that amends the Bank Secrecy Act (BSA), which in turn implements regulations on the FBAR form (Foreign Bank and Financial Accounts) that is used by taxpayers to report their foreign accounts.In...
denis,kleinfeld,Full-Force,Crackdown,Foreign,Accounts
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2011-56-09
Monday, 09 May 2011 07:56 AM
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