The United States has stepped up its war on tax evaders and the banks that assist them with legislation that could drain up to $8.5 billion from secret offshore accounts within a decade.

President Obama, who has made the fight against tax evasion one of his key issues, said that he was looking forward to using the new rules to crack down on “the few individuals and businesses who put profit before responsibility”. The US loses an estimated $100 billion (£61 billion) to tax cheats annually.

The Bill proposes forcing foreign banks operating in the US to disclose American customers’ names and annual account balances or face a 30 per cent tax on the bank’s income from US assets.

All Americans with more than $50,000 in foreign assets would have to declare their holdings in their tax return. Failure to do so would land them with a penalty of up to $50,000. Anyone caught understating the scope of their offshore assets would be hit with a penalty equivalent to 40 per cent of the amount by which they falsely reduced the value of the assets. There would be a minimum $10,000 fine for failing to report transactions involving foreign trusts.

The legislation also cracks down on shell companies by requiring offshore corporates to disclose the identity of any individual or group holding 10 per cent of the shell’s shares.

The Bill was introduced by Charles Rangel, chairman of the House Ways and Means Committee. Mr Rangel, a New York Democrat, is himself being investigated by the House Ethics Committee over his failure to disclose more than $500,000 worth of assets.

Mr Rangel, who has admitted on several occasions in the past to errors in the financial forms that he submits to the Government, said that the new Bill offered foreign banks a simple choice. “If you wish to access our capital markets, you have to report on United States account holders,” he said.

UBS has been the main target of the IRS’s harder line on tax evasion, thus far. In August the Swiss bank agreed to supply the names of about 4,450 clients with offshore accounts to settle a civil action brought against the company by the IRS. The IRS has brought tax evasion cases against about 150 clients of UBS after obtaining their names in February during an earlier criminal action against the bank. The IRS gave Americans until October 15 to reveal hidden accounts and avoid prosecution.

The IRS is run under the auspices of the Treasury Department. During his confirmation this year, it emerged that Timothy Geithner, the incoming Treasury Secretary, had failed to pay $35,000 in taxes. He described the non-payment as “unintentional”.

Rising house prices were not enough to prevent consumer confidence plunging in the United States, according to the S&P/Case-Shiller indices. House prices were up by more than 1 per cent in August, compared with July, the fourth straight month that prices had risen, and a sign that the housing market was stabilising.

Year-on-year prices declined more than 10 per cent. This was taken as a positive — August was the seventh consecutive month with an improved annual rate of decline. US house prices are now at autumn 2003 levels.

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