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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US government begins UBS account crackdown

Over 150 customers at UBS are to be investigated by the US authorities on suspicion of tax avoidance.

According to court documents, the account holders are accused of concealing their income or assets in order to pay less tax in the US.

These are the first cases to be brought against clients of the Swiss bank since it and the US government reached a deal to disclose the names of some customers who were suspected of acting illegally.

Details of the agreement are due to be announced this week and it has been suggested that the move marks the end of the confidential Swiss bank account, with Reuters reporting that the number of cases will "mushroom" in the near future.

Speaking to the Associated Press after the deal was agreed last week, Florida-based tax lawyer William Sharp said that it is unlikely the move would have gone ahead without UBS agreeing to hand over a "substantial" amount of information.

He predicted that "at least several hundred" names will have been given to the US authorities.

UBS and US government reach tax dispute deal

UBS has reached an agreement with the US government that will result in the Swiss bank settling a dispute over tax evasion out of court.

Stuart Gibson, US justice department lawyer, said that both parties have settled on the details of a contract.

However, Mr Gibson added that it will "take a little time for the agreements to be signed in final form".

Details of the arrangement, such as how many names of the US customers that hold offshore accounts at UBS will be revealed to the government, were not divulged.

Florida-based tax lawyer William Sharp told the Associated Press that it is unlikely that such a move would have been made without a "substantial handover" of details.

He predicted that "at least several hundred, if not thousands" of names have been supplied to the authorities.

Shares in UBS fell earlier this week due to the ongoing negotiations, but have now rebounded on the news.