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Illegal Offshore Account Holders

Nearly a half-million Americans have a painful decision to make by Aug. 31 — admit to the IRS that they’ve been hiding secret offshore bank accounts, or take their chances that the government won’t find out and possibly send them to jail.

For many, it’s not an easy choice. To take advantage of the amnesty program – the second one it has offered, though the IRS says it will be the last -- the U . S . government is asking account holders to pay a steep penalty: 25 percent of the highest value of the account in recent years.

The U.S. government has prosecuted dozens of clients of secret Swiss and other offshore banks since its investigation began in 2009 . B ut recently the government opened a second front in its war on global bank secrecy by filing a so-called “John Doe summons” against HSBC. The summons demands the names of U.S. residents who may have been avoiding taxes with undisclosed accounts at HSBC in India.

A U.S. taxpayer who has an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 is required to disclose the existence of the account on his or her individual income tax return. A U.S. taxpayer must also disclose the existence of the account by filing an FBAR with the U.S. Treasury.

With an estimated 500,000 U.S. residents out there failing to disclose offshore accounts and the government turning up the heat, chances are that many will eventually be identified and prosecuted.

So, who are the offshore account holders that have already been caught and how did they operate their tax haven accounts? Click ahead for the details.

By Eamon Javersand Paul Toscano
Posted 15 April 2011

Photo: Collin Anderson | Brand X Pictures | Getty Images