On July 1 the IRS will gain access to information from foreign nations, banks, and institutions that previously has been kept secret (or at least out of the reach of the IRS). Offshore account and asset information has been a challenge for the IRS for many years. To date, the IRS has relied on the Foreign Bank Account Report or FBAR and other reporting mechanisms where the taxpayer is providing the information. After July 1, in many cases they will have direct access and will no longer be forced to make analysis and tax related decisions based solely upon data reported by the taxpayer. It also means that the information provided by US taxpayers, US expatriates and foreign nationals who live and work in the US for the past several years will be much more transparent, and independently verifiable. If account or asset information has been unreported or undervalued it presents the US Treasury with a landmark opportunity to assess back taxes, fines, penalties, interest and in some cases, criminal charges. This is genuinely a historical development, and it will change the landscape of investment, taxation and financial strategy for many sophisticated investors going forward.
