Internal Revenue Service IRS issued a statement this week stating that they will be pursuing foreign bank accounts held by US taxpayers in other countries including South Korea, Hong Kong, Singapore and several European countries.
US Senate also introduced a new tax and banking legislation which will further frustrate US taxpayers seeking tax shelters through foreign bank accounts.
The bill requires 30% withholding on payments to foreign financial institutions and other entities unless they acknowledge the accounts’ existence to the IRS and disclose relevant information including account ownership, balances and amounts moving in and out of the accounts.
Individuals and entities would be required to report offshore accounts with values of $50,000 or more on their tax returns. The statute of limitations will be extended to six years when offshore accounts are unreported or misreported.
Advisors who help to set up offshore accounts would be required to disclose their activities or pay a penalty.