Susan C. Morse, Making offshore account holders disclose, available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1489026
This article considers the compliance issues raised by individual tax payer investments in offshore bank and similar accounts. Offshore account holders have historically had a high rate of tax evasion and have contributed significantly to the tax gap. However, investors in offshore accounts are subject to an ingenious self-reporting regime – the Report of Foreign Bank and Financial Accounts, or FBAR – that the IRS has recently begun to effectively enforce.
The article frames the FBAR requirement as a penalty default information-forcing mechanism. This mechanism currently applies directly to taxpayers and could also apply to third-party banks. Characterising the requirement in this way yields several proposals for the continued development of the FBAR rules and the qualified intermediary and non-qualified intermediary rules applicable to non-US banks.
An excellent overview of the IRS’ use of Report of Foreign Bank and Financial Accounts (FBAR) self-reporting regime by a professor from Santa Clara University School of Law. Most interesting is its discussion of “how the FBAR filing requirement might interact with an existing mechanism to identify non-US banks as fully cooperative qualified intermediaries, or ‘QIs’ and less cooperative non-qualified intermediaries, or ‘NQIs’.