Agents at the IRS have been quietly rubbing their hands together in anticipation of July 1. That’s when a new law requiring foreign banks to report on offshore accounts held by American citizens goes into effect, enabling the IRS much more information it can use to track you down if you are a tax evader.

If you have an offshore account — a Swiss bank account, say, or one in the Cayman Islands — the chances that the IRS will find out about it are going way, way up.

But last week, the agency also opened the door wider to its amnesty program in a last-ditch effort to get taxpayers inside before the new law goes into effect. On one hand, IRS agents probably would enjoy winning cases against the biggest and most stubborn tax evaders. On the other hand, it doesn’t want to waste time with the smaller ones.

“Taxpayers considering taking advantage of the existing IRS amnesty programs should decide quickly … because once the IRS approaches a taxpayer, amnesty will no longer be available,” Ramon Camacho, international tax technical lead at Chicago-based McGladrey LLP, an accounting firm that focuses on middle market companies, in an email. “(The law) really is a game changer in the calculus of whether to come forward.”

The IRS has been trying to wring tax revenue out of offshore accounts at least since 2009, when a now-very-wealthy whistleblower who worked for UBS came forward with details of how Americans were using the famous Swiss banking system to avoid taxes. The Swiss have a tradition of banking privacy or secrecy dating back to the Middle Ages — a tradition that gave us a trope: the Swiss bank account as a stand-in for the idea of hiding your money from the authorities.

The carrot and the stick

The IRS goes after tax evaders with a carrot-and-stick approach. The stick was the increased investigation into the accounts, and the penalties of up to $100,000 if you were caught. (You can also go to jail for tax evasion). “If we find you, you will face higher penalties and, as the record shows, could face criminal prosecution and jail time,” said IRS Commissioner John Koskinen in a release.

The carrot: a series of tax amnesties that have so far yielded $6.5 billion in interest, penalties and taxes as 45,000 taxpayers have come forward, according to the agency.

The new terms released last week make more taxpayers eligible to file for amnesty under easier rules, Camacho said. You can file for the amnesty if you have offshore accounts but are living in the United States, and even if you owe more than $1,500 in back taxes. You also don’t have to certify that your failure to pay tax was due to an oversight. (There’s a certain amount of irony in the IRS waiving this requirement, because if you were deliberately cheating on your taxes, you probably don’t have a problem lying about why you did it). Here’s the web site with information about it. If you file for amnesty, you’ll have to pay the back taxes, plus a 5% penalty. Before this latest rule change, more taxpayers would have paid a 27.5% penalty.

And if you are looking to open a foreign bank account, here’s the list of financial institutions approved (those that who have agreed to report their information to the IRS.)

Global perspective

The IRS, octopus-like, has been reaching into the lives of U.S. citizens, even those living abroad, in its pursuit of taxes on offshore accounts (what is “offshore” is, of course, “onshore” to someone living outside the US.) So you might have the situation of a U.S. citizen who lives in, say, Thailand, and has for 25 years, who has a bank account in the Cayman Islands, who will be on the hook for US taxes. Or, a U.S. citizen with a Canadian bank account, living in, well, Canada.

In fact, the Globe and Mail just called the amnesty program “inadequate.”

“Even a Canadian who was born in Florida 50 years ago while his or her parents were on an ill-timed one-week vacation, and who has never since lived or worked in the U.S., is as obliged to report to the IRS every April,” editorial writers said.

For more on this story go to: http://www.forbes.com/sites/elizabethmacbride/2014/06/23/last-call-to-dodge-the-irss-crusade-against-offshore-accounts/