Foreign-account holders may face double trouble

Not all are aware that non-bank offshore assets must be reported to Treasury as well as IRS

After the headlines about the IRS' going after secret Swiss bank accounts, investors are learning to their dismay that they could face fines and prosecution for failing to report other foreign assets, such life insurance, to both the IRS and the Treasury Department.

Numbered bank accounts used to shelter wealth from the Internal Revenue Service are in the spotlight in the wake of the recent UBS AG scandal, but clients who own other types of foreign assets may be unaware that those accounts also must be disclosed to the Department of the Treasury, said Melissa Gillespie, a New York-based international tax attorney.

In addition to reporting investment income and capital gains on their income tax returns, U.S. citizens and residents with a financial interest or signature authority over a foreign financial account that's worth more than $10,000 at any time of the year must report that account to the Treasury Department through a form called the Foreign Bank Account Report.

Along with foreign bank ac-counts, that treatment applies to foreign life insurance policies with a cash surrender value greater than $10,000, trusts with foreign financial accounts, investments in gold bullion and foreign-type individual retirement accounts, or pension plans that are in the client's control.

Foreign annuities with a balance that exceeded $10,000 any day during the year must also be reported to the Treasury

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