United States tax dodgers who hid assets overseas will get a few extra weeks to apply for an amnesty programme that has been flooded with applications ahead of the Wednesday deadline.

The Internal Revenue Service, the government tax-collecting agency, said Monday the deadline will be extended until October 15.

More than 3,000 Americans have applied for the programme, which promises no jail time and reduced penalties for tax cheats who come forward, said a government official who spoke on condition of anonymity because he was not authorised to speak on the record ahead of the public announcement.

The IRS is extending the Wednesday deadline to give a rush of applicants more time to prepare their paperwork

The IRS has long had a policy that certain tax evaders who come forward before they are contacted by the agency usually can avoid jail time as long as they agree to pay back taxes, interest and hefty penalties. Drug dealers and money launderers need not apply. But if the money was earned legally, tax evaders can usually avoid criminal prosecution.

Penalties

Fewer than 100 people apply for the programme in a typical year, in part because the penalties can far exceed the value of the hidden account, depending on how long the account holder has evaded US taxes.

But in March, the IRS began a six-month amnesty programme that sweetened the offer with reduced penalties for people with undeclared assets.

As the initial deadline approached, the IRS was contacted by tax advisers from across the country requesting more time to prepare applications from a rush of tax cheats looking to come clean, the government official said.

The amnesty programme is part of a larger effort by federal authorities to crackdown on international tax evaders. In August, the US and Switzerland resolved a court case in which Swiss banking giant UBS AG, agreed to turn over details on 4,450 accounts suspected of holding undeclared assets from American customers.

The process of turning over the information is expected to take several months. But once the IRS obtains information about an international tax dodger, they will be ineligible for the amnesty programme.

Publicity from the case, even before the agreement was announced, had a lot of wealthy Americans with offshore accounts nervously running to their tax advisers.

Lawyers and advisers from several firms have said they were swamped with calls from people hiding assets overseas. Their advice: Call the IRS before the IRS calls you.