IRS: Offshore tax crackdown should produce ‘billions’

By Kevin McCoy, USA TODAY
More than 14,700 Americans with secret offshore bank accounts came forward for a recently concluded federal tax leniency program, helping generate what IRS Commissioner Douglas Shulman said on Tuesday would be “billions of dollars” in new tax revenue.
A rush of tax evaders applied before the program’s Oct. 15 deadline — nearly double the IRS preliminary tally — taking advantage of guarantees that they wouldn’t face criminal prosecution if they paid taxes, interest and reduced civil penalties.

Shulman said the applications, combined with 4,450 American accounts at Swiss banking giant UBS that are scheduled to be disclosed under a court settlement, are a win for Americans who pay their fair share, because former tax evaders will begin sharing the load.

“We have now gained access to thousands of taxpayers and bank accounts that we have never had before,” said Shulman, who added that an intensified federal crackdown on international tax evasion shows “we are serious about piercing the veil of bank secrecy.”

The IRS announcement came as the agency also disclosed the criteria Switzerland is using to determine which American clients of UBS will have their identities disclosed to U.S. authorities.

Shulman said the IRS is using voluntary disclosure program evidence to probe financial institutions and intermediaries that help Americans hide income offshore.

The leniency offer accompanied the IRS’ legal battle with UBS, which in February agreed to a $780 million settlement of criminal charges that it had secretly sent bankers into the U.S. to help American clients evade taxes. The bank later turned over data for up to 250 Americans whose accounts had alleged signs of tax evasion.

Under the federal civil settlement, Swiss authorities have until August to disclose accounts for 4,450 American clients of UBS. Federal officials said the first 500 would be identified by month’s end.

The targeted UBS accounts include those that held more than 1 million Swiss francs — roughly $985,000 — any time between 2001 and 2008 for which “tax fraud or the like” is suspected.

Similarly targeted are accounts that earned an annual average of 100,000 Swiss francs for at least three years.

The settlement criteria define “tax fraud” to include income under-reporting based on a “scheme of lies.” Other criteria target owners who used calling or debit cards to trade and move funds secretly.

Martin Press, a Fort Lauderdale tax lawyer whose firm represents some of the targeted Americans, said UBS appeared to be handing over ex-clients who moved their accounts to other Swiss banks.