A new era in tax regulation: the United States and the UK are cracking down on taxpayers who have not declared income held in offshore bank accounts.

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For decades, U.S. and UK taxpayers have kept caches of undeclared money in bank accounts throughout Switzerland and Liechtenstein. But as governments throughout the world struggle with large deficits, several tax authorities--including those in the United States and the United Kingdom--are raising revenue by encouraging taxpayers to disclose previously undeclared income through the use of tax amnesties and disclosure opportunities. US Tax & Financial Services Sarl can help you navigate these murky waters.

For U.S. citizens

U.S. citizens, U.S. permanent residents and certain non-resident aliens are required to report their worldwide income on their U.S. income tax return. In the event of noncompliance, the Internal Revenue Service's (IRS) voluntary disclosure practice permits U.S. taxpayers to declare previously undisclosed income including income from secret bank accounts.

A taxpayer may make a voluntary disclosure by having his or her advisor contact the IRS Criminal Investigation Division (CID) directly, discuss the facts and circumstances, and determine whether the IRS has already begun an investigation into the taxpayer's non-disclosure.

If the CID officer confirms that a valid voluntary disclosure can be made, the taxpayer must prepare and file amended or delinquent tax returns (generally for the prior six tax years).

The taxpayer will be responsible for paying the tax liability and interest on the underpayment of tax in each year. Additional penalties may also apply based on the taxpayer's ownership interests in trusts, corporations and foreign bank accounts.

For UK citizens

The United Kingdom has introduced two amnesty procedures both of which were implemented on September 1. Under the New Disclosure Facility (NDO) and the Liechtenstein Disclosure Facility (LDF), UK taxpayers are encouraged to declare and pay outstanding taxes owed for the past 20 years (10 years for the LDF) plus a 10 per cent penalty.

It is worth noting that ordinarily a penalty of 100 per cent of the outstanding tax can be imposed in the UK, and a successful criminal prosecution can lead to seven years imprisonment.

Under the LDF only, a Financial Intermediary, such as a trust company or bank, is obligated to contact its clients and request a formal certificate stating unequivocally that the taxpayer is not subject to UK tax or was fully compliant for the previous 10 tax years.

A helping hand

With offices in London, Zurich and Geneva, US Tax & Financial Services Sad is at the forefront of the voluntary disclosure for U.S. citizens, the UK NDO and the UK LDE Our offices are comprised of both U.S. and UK trained attorneys and accountants with an in-depth knowledge of tax issues related to individuals, corporations, partnerships, trusts and estates. All our clients are dealt with in absolute confidentiality.

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