Swiss to Reveal Owners of 5000 Secret Accounts

The IRS has been involved in litigation with the Swiss bank UBS seeking account information on approximately 52,000 Swiss bank account holders suspected of US tax evasion.

On the domestic front, the IRS has offered immunity from criminal penalties to taxpayers who voluntarily disclose their off-shore banking arrangements and pay the back tax and penalties due on the previously unreported income. According to the IRS, in June 2009 approximately 400 taxpayers came forward voluntarily, while less than 100 did so in all of 2008. IRS clemency for off-shore tax evaders will expire September 23, 2009.

Tomorrow the US and Switzerland will ink a deal that will result in the disclosure to the IRS of ownership information on more 5000 (10%) of the accounts in question. The Wall Street Journal reported last week that "that many of those who confess are likely to pay 40% or more of the total account value in taxes, penalties and interest, plus state taxes, penalties and interest." The article continues by summarizing congressionally authorized "taxes and penalties on a hypothetical $1 million at $2.3 million, plus interest and the possibility of criminal prosecution" for those the IRS catches up with independently.

There is no statute of limitations in the tax code for fraud. This applies equally to off-shore tax evaders and to families and nannies who fail to disclose and pay the employment taxes and income taxes on wages paid to the nanny or other household employer. Our experience has always been when overall tax revenues decrease, enforcement action steps up considerably.