New York (HedgeCo.Net) – Wealthy Americans who have been hoarding cash overseas and failing to pay Uncle Sam are getting a break, as the Internal Revenue Service unveils a plan that will greatly reduce their penalties.

The idea comes a month after UBS was charged with helping thousands of American clients hide over $15 billion in secret Swiss bank accounts.  The IRS is forcing the bank to disclose the names associated with 52,000 offshore accounts, something that UBS is trying desperately to contest in order to salvage their U.S. clientele base.  

Should these individuals come forward prior to this release of names, the IRS is offering a reduced penalty of up to 20 percent for not filing a Report of Foreign Bank and Financial Accounts, also known as an Fbar.   However, the clients must be proactive.  Should they not come forward and their names eventually be disclosed, they not only face a penalty equal to 50 percent of the balance of each account, but other fines and possible jail time as well.  

"This is a chance for people to come clean on their own," IRS Commissioner Doug Shulman explained.

The IRS will still require the individuals to pay any back taxes owed over the last six years as well as any applicable fees.  It is estimated that the U.S. loses $100 billion a year in lost tax revenue from offshore activity.

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

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Globe and Mail – Goodwood Inc., a value-oriented manager, briefed investors Thursday on a dismal September. There’s a lot of these letters going out from hedge fund managers. Goodwood’s funds were down 16 per cent last month, bringing the year-to-date loss to 32 per cent. Year-to-date, the S&P/TSX benchmark is down 13 per cent.

Goodwood executives Peter Puccetti and Cam MacDonald used their September letter to unitholders to explain the madness of markets, and plead for patience and perspective. They certainly deserve a hearing. But investors who bought into hedge funds on the basis of absolute returns – making money in good markets and bad – are going to struggle with these pleas.

“We have seen many well-known investment management operations badly harmed as a result of their leverage exacerbating the effects of the ongoing credit crunch and deleveraging we are currently living through,” said Goodwood’s team.

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