Making offshore account holders disclose

Main Article:

Grey matters

Susan C. Morse, Making offshore account holders disclose, available at

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.

CFR comment
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’.