An interesting discussion is taking place in Ireland on the question of whether the State can seize so-called dormant bank accounts. One of the recommendations that emerged from the report of the Dáil committee of public accounts, which investigated the evasion of Deposit Interest Retention Tax through the use of bogus non-resident accounts, was that legislation be introduced to enable the State to seize the money in dormant accounts.
To some, the suggestion that bank accounts be seized is alarming in itself. What are the legal and constitutional ramifications? How would these accounts be selected? Would they include such assets as unclaimed life-insurance policies that beneficiaries, perhaps children now in the U.S., should inherit?
And what exactly is a dormant account?
The latter is a question that has not been determined, although some news reports say the government is proposing that an account untouched in five years would be regarded as dormant.
For some time now, Ireland has been adopting an aggressive approach in its effort to clamp down on tax evasion and fraud. And, lately, it has not shied away from investigating the big names, the rich and powerful, those who had the means and connections to manipulate the system. For Irish immigrants in the U.S. who are watching and who once paid punitive tax rates through the Irish PAYE system, these have been welcome changes. But, as is the case in many well-intentioned endeavors, the prospect of seizing "dormant" bank accounts may hit an entirely innocent group, Irish and Irish Americans who hold accounts in Ireland and may, for a variety of personal reasons, not have had a transaction in the last five years.
Of course, holding funds in regular deposit accounts during these times of record low interest rates is, quite literally, a waste of money. But allowing an account to, possibly, be seized by the State is reckless. And, unlike times of old in Ireland, the Celtic Tiger economy certainly doesn’t now need the money; the Irish government took in £1.2 billion more than it spent last year and £100 million more than the government had forecast at budget time.
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So, if you have a long-forgotten bank account in Ireland, now may be the time to check it out — or perhaps close it out.