IRS to get 'most-wanted' Swiss accounts
Wednesday, August 19, 2009
This is a nice juxtaposition, don't you think? We go from wealthy folks wanting to pay higher tax rates to wealthy folks doing whatever they can to avoid any tax rates.
However, some of those who tried to escape U.S. taxes by opening accounts in Switzerland are out of luck.
In an agreement formally announced today, the IRS says it "will receive substantially all" of the questionable Swiss accounts that it's interested in seeing.
Basically, the Swiss government has agreed to make its main bank, UBS, defy the country's financial secrecy laws and name some names of U.S. account holders the IRS suspects have been evading taxes.
What's really interesting is what the IRS considers "substantially all" when it comes to the alleged tax evasion accounts.
When this started, American tax officials reportedly were after around 52,000 suspect accounts. So far, the Swiss bank has released data on around 250 of them.
Now the official agreement says the IRS will get specifics on approximately 4,450 alleged tax evaders.
Let me pull out my trusty calculator. 52,000 minus 250 equals 51,750. Now subtract another 4,450 and you've got 47,300.
Hmmm. 47,300 accounts still secret and still holding money upon which U.S. taxes haven't been paid.
'Most wanted' accounts: OK, life if full of compromises. And the IRS swears this is a good deal.
IRS Commissioner Douglas Shulman, in announcing the agreement, said these are "the accounts we most wanted."
And the Shulman did indeed address the 52,000 figure.
"This is a number reported by UBS as all of their accounts with any U.S. connection," said Shulman. "Many of these accounts were held by U.S. people who had complied with the law and paid their taxes. Said another way, we were never interested in pursuing 52,000 accounts and this was never an IRS number.
"Remember, we filed this lawsuit when the Swiss government was taking the position that we could not have access to any of these accounts. That posture changed in the past month and we were able to gain access to the accounts we wanted."
So when you take the 4,450 accounts that the IRS really, really wants from UBS, along with folks who have in recent months voluntarily disclosed their offshore accounts to the IRS, tax officials say they are pretty happy. They've been notified of a substantial amount of previously untaxed income; the accounts, said the commissioner, at one point held more than $18 billion.
Plus, the Commissioner said, the agreement is "an historic development in our international efforts, and it helps build a solid foundation for addressing future offshore issues."
The agreement also wrapped up what could have been a long, and costly, legal battle.
The U.S. has agreed to drop its original John Doe summons for all the accounts. But, noted Shulman, "we retain our right to resume summons enforcement if these efforts fail and we do not receive what the agreement outlines."
Still time to surrender: Meanwhile, even though the U.S. has gotten what it most wanted from the Swiss, the IRS reminds other folks hiding income and assets in offshore accounts that they still have time to 'fess up and get right with Uncle Sam.
This includes any of the 4,450 most wanted UBS account holders, as well as the other 47,300 somewhat less attractive to the IRS. The question is for all the account holders is how lucky do they think they are? Will they be part of the 4,450 or the remainder?
Folks who don't feel like pushing their luck have until the voluntary disclosure deadline of Sept 23. If a UBS customer doesn't come forward by then, Shulman said "once the Swiss government sends us the name, all bets are off." Offshore account revelations after the cut-off date will result in stiffer civil penalties and possible criminal prosecution.
Finally, Shulman said international tax enforcement remains a top priority.
So if you're thinking about setting up an offshore account, think again. And if you have one, you might want to talk to your attorney and financial adviser before the end of September rolls around.
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