IRS to focus onrichest with overseas accounts

| 12/04/2011

(Bloomberg):The IRS is focusing on the wealthiest Americans with money overseas as it develops regulations that will require foreign banks to give government more information about those customers. In new guidance, the IRS said it will direct foreign banks to spend less time identifying and monitoring accounts of people with less than $50,000 and more effort focusing on US account holders with more than $500,000 and with private banking relationships. The information provided should help financial institutions figure out the process of identifying US-linked accounts, even though the IRS didn’t answer every question that companies have raised, said Barbara Angus, a partner at Ernst & Young LLP in Washington.

“It has operational impacts on financial institutions, on all aspects of their business, on IT systems, on the account opening process,” she said. “That kind of impact, again, is sort of why information is needed, and needed as soon as possible.”

The requirements, passed by Congress last year, take effect in 2013. They force foreign banks to tell the IRS about U.S. account holders as part of the agency’s effort to combat offshore tax evasion. Banks based outside the U.S. face 30 percent withholding on certain payments from inside the U.S. if they fail to share information with the IRS.

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