FinCEN Delegates Powers To IRS

by Leroy Baker, Tax-News.com, New York

14 April 2003

Officials from the Internal Revenue Service and the Financial Crimes Enforcement Network (FinCEN) announced last week the signature of a memorandum of agreement that delegates enforcement powers to the IRS for Foreign Bank and Financial Account reporting.

It is the latest move in the IRS's campaign targeting individuals attempting to hide income in undisclosed foreign bank accounts. At present, the Revenue is participating in an amnesty which encourages people who use offshore payment cards to disclose their financial arrangements and avoid prosecution, known as the Offshore Voluntary Compliance Initiative (OVCI).

Residents or persons carrying on business in the US are required by the Bank Secrecy Act to file a report with the Treasury if they have an overseas account holding over $10,000 at any time during the calendar year. By noting the account number on their tax return, individuals remain compliant. However, failure to reveal such accounts can lead to civil or criminal proceedings. This will be waived however, if disclosed under the OVCI.

“This delegation of authority results from increased cooperation between the IRS and other Treasury bureaus to improve compliance with the law,” said acting Commissioner Bob Wenzel. “Our nation will benefit not only from improved compliance with the tax laws, but also our determination to make certain that those with accounts in foreign countries meet their reporting requirements.”

Taxpayers coming forward under the OVCI are warned to be aware that they will still be liable for back taxes, interest and certain inaccuracy and delinquency penalties under the compliance initiative.

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