After the landmark agreement between the U.S. and Swiss government over secret (UBS) Swiss bank accounts, held by U.S. Citizens, the IRS is now focusing on hedge funds in the Cayman Islands. Recently, IRS officials advised that certain U.S. investors in off-shore hedge funds must file a FBAR.
On June 12, 2009, an IRS official stated that the term “financial interest” (which requires a FBAR filing) includes hedge funds that “function as mutual funds”.
It appears the IRS and Justice Department will identify U.S. Taxpayers who evade U.S. taxes, by investing with off-shore hedge funds. The IRS and Justice Department are pressing foreign financial institutions to provide them with information about Americans with “foreign, secret bank accounts”.
Please see 8/24/09 Wall Street Journal article below.
IRS Could Target Off-Shore Hedge-Fund Investors Next
By Ronald D. Orol
Off-shore hedge-fund investors could be the next target of the Internal Revenue Service and U.S. lawmakers after last week’s landmark agreement between the U.S. and Swiss governments over secret Swiss bank accounts held by U.S. citizens.
The IRS’s agreement with the Swiss government and UBS AG will result in thousands of Americans who thought they had a secret Swiss bank account having their names and account details turned over to U.S. tax authorities.
Recent statements from IRS officials and efforts under way on Capitol Hill indicate that it is only the beginning. After announcing the Swiss deal, IRS Commissioner Douglas Shulman said the agency will continue to take steps to bring in tax avoiders.
For complete article please click link above.