Stepping up its scrutiny of offshore investing, the IRS demanded that hedge-fund and private-equity investors disclose hundreds of billions of dollars they have invested offshore. This is part of a crack down on questionable use of offshore tax havens, which started with a very public case filed against UBS.
UBS agreed to pay $780 million to settle accusations that it had defrauded the IRS by allowing wealthy Americans to hide billions of dollars using secret offshore bank accounts.
In a conference call on June 12, industry lawyers and accountants were told that investors in offshore hedge-fund and private-equity funds must file an FBAR (Report of Foreign and Financial Account) by June 30. Prior to this time many of these offshore investors were advised by tax attorneys that they didn't have to file an FBAR. Some offshore investments aren't taxable, but others are.