The Treasury Department recently introduced new legislation intended to reduce the amount of taxes lost through the illegal use of hidden accounts by U.S. individuals to evade U.S. tax. The legislation, the "Foreign Account Tax Compliance Act of 2009," would also increase the amount of disclosure by foreign financial institutions, foreign trusts, and foreign corporations about their U.S. accountholders, grantors, and owners, and impose penalties on U.S. taxpayers for underpayments attributable to undisclosed foreign financial assets. Another key provision would level the playing field for foreign nationals by treating dividend equivalent payments they receive as taxable dividends rather than letting them escape U.S. taxation as they do under current law in some cases.
The proposed legislation also would provide the U.S. Treasury Department with significant new tools to find and prosecute U.S. individuals that hide assets overseas, and increase cooperation with countries around the world to increase tax information exchange as part of the global effort to end offshore tax evasion.
The Treasury's announcement of the bill is available at: http://www.treas.gov/press/releases/tg332.htm
The full text of the proposed Foreign Account Tax Compliance Act of 2009 is available at: http://finance.senate.gov/sitepages/leg/LEG%202009/102709%20Leg%20Txt%20Frgn%20Accts%20Tax%20Comp%20Act.pdf