Friday, July 4, 2008

IRS Schedules Conference Call With Top Accounting Firms To Solicit Help In Detecting Hidden Foreign Bank Accounts

In the latest twist in attempting to uncover hidden bank accounts that Americans may have at foreign banks, the IRS is planning to speak on Tuesday to six accounting firms about how they could help find foreign banks that fail to appropriately identify US customers holding investments or income in offshore accounts.

According to FT, a conference call has been scheduled between the IRS and Deloitte, Ernst & Young, KPMG, PwC, Grant Thornton, and BDO Seidman.

It is not clear what the upside to the accounting firms would be to aggressively help the IRS with this type information, especially if some of the firms may have offered suggestions to their clients on how to structure foreign accounts in a manner that circumvented IRS reporting requirements.

According to FT:

...the discussion is expected to centre on the so-called US Qualified Intermediary programme, which created an arrangement starting in 2000 between banks and the US authorities allowing a degree of client confidentiality in return for the provision of certain client information. The US rules cover individuals but not companies, meaning that individuals could exploit the rules to channel assets to non-declarable companies created in tax havens.

The IRS has greater assurance that taxes are properly withheld “because QIs agree to have external auditors perform oversight of their compliance with required procedures”, according to a 2007 report by the Government Accountability Office, the investigative arm of the US Congress. But it also said: “Within their limited scope, auditors of QIs are not responsible for following up on possible indications of fraud or illegal acts.”

In a parallel development, on Tuesday, a federal judge gave the IRS permission to serve a “John Doe” summons on UBS that would direct the bank to produce records identifying US taxpayers who held undeclared accounts between 2002 and 2007 with the bank and chose to have them hidden from the IRS.


  1. Bloomberg reported this 24 hours before FT.

  2. FT has a lot more details.

  3. Brandy -- Uh, no, I read the FT piece. It was pure catch-up.