IRS Giving More Time to Offshore Account Holders

With thousands of wealthy Americans lining up to turn over their offshore account information in time to beat an amnesty deadline, the IRS is apparently ready to give them a little more time.

Perhaps that's because the agency is gaining valuable information about just where the wealthy are squirreling away their tax-free money through the program.

The New York Times reports that the IRS will today extend the deadline for the amnesty program to October 15 from September 23, giving people an extra 20 days to confess their offshore holdings. The amnesty program allows people to turn themselves in and face more lenient penalties than the possible criminal prosecution they could face if the IRS finds out on its own that they're sheltering money from tax collectors in overseas accounts.

So far, 3,000 taxpayers have come forward, the Times reports, compared with just 80 last year. Tax attorneys have said they're being kept busy by clients with offshore accounts looking for advice about how to avoid too much trouble from tax collectors.

The amnesty program was set up in March to lure clients of Swiss bank UBS to come forward. The government has reached a historic accord with UBS and Swiss authorities whereby the bank will release 4,450 client names. The idea behind the settlement was to flush out more people with offshore accounts, and it appears to be working.

Not only UBS clients are coming forward. Last week it was revealed that clients of banks in Germany, England, Italy, Belgium, Singapore, Hong Kong, the Bahamas, Granada, the Cayman Islands, and Israel are also calling their lawyers to see what to do about their offshore holdings.

That could open up even farther-ranging investigations of overseas banks and the Americans who stash cash in them. The U.S. government is taking a harder line on such accounts due to the amount of money it believes it loses in taxes because of them.

Senator Carl Levin estimates the U.S. loses $100 million a year to offshore-account tax evasion.