After that date, the Feds plan to go hard after any wealthy U.S. citizens who have undisclosed funds in offshore bank accounts – and they will know who many of these people are, thanks to a recent agreement between the Federal government and UBS, Switzerland’s largest bank, in which UBS admitted defrauding the government, paid $780 million to settle the matter, and disclosed the names of some 4,450 Americans with secret accounts at the bank. UBS has also closed the accounts of hundreds of American customers, prompting many to declare their holdings in order to avoid harsher punishment.
Until the 15th, the Internal Revenue Service is offering wealthy Americans using offshore accounts to evade U.S. taxes a deal: Come forward and pay the taxes owed on the offshore money, and penalties will be limited to a one-time levy of 5 to 20 percent of the taxes owed.
So far, at least 4,000 well-off Americans with secret offshore bank accounts have disclosed their holdings to the IRS. Federal prosecutors are preparing cases against at least another 150 who they know have accounts but have not yet come forward.
The leniency is part of a broad Federal crackdown on the use of offshore accounts to evade taxes, including a challenge to Switzerland’s long history of banking secrecy.
Attorneys and accountants representing well-heeled individuals and families report a rush of concerned clients seeking advice on how to respond to the crackdown. Robert F. Keating, a New York white-collar criminal defense lawyer, told The New York Times, “A lot of people are in denial and remain willing to take their chances” of not getting caught.
Still others are filing amended returns for prior years, paying taxes on the total amount due, and hoping that the returns will not be connected to their offshore accounts.
The crackdown on offshore tax evaders is also causing grief in the world of private banking, for the disclosure program requires participants to give up the names, phone numbers, and other contact information of bankers, lawyers, accountants and anyone else who helped them evade taxes.
Some wealthy Americans face tax bills running into the hundreds of millions of dollars on the previously undisclosed accounts. Those who do not participate in the disclosure program face a far higher probability of getting caught, and paying far more in penalties and fines.
Written by Sandy Smith
Exclusive to HULIQ
Posted October 13th, 2009 by Sandy Smith
