Monday, May 26, 2008

Better be paying taxes on foreign accounts

The IRS is cracking down on U.S. taxpayers that conceal assets in foreign accounts, according to BusinessWeek. Countries have been sharing more information about assets with each other, making it easier to catch tax cheats.

It's not just blatant tax cheats who have reason to worry. The IRS has also focused increased attention on the more than 700,000 U.S. taxpayers thought to be concealing assets in overseas accounts. Some may be doing so unintentionally, like expatriates living abroad and banking locally. A law dating back to 1970 requires a U.S. taxpayer with an overseas account of $10,000 or more to disclose it to the IRS. Until 2004, people who failed to file that special form received a maximum fine of $100,000, and the law was rarely enforced. Now they can face penalties that amount to as much as half the balance in the cloaked accounts, along with prison terms of up to 10 years.
Do the right thing and pay your taxes, or face 10 years in the big house. A pretty easy decision.