Tax Evaders Flock to IRS to Confess Their Sins

[question everything]

JULY 30, 2009

Tax Evaders Flock to IRS to Confess Their Sins

By LAURA SAUNDERS and CARRICK MOLLENKAMP
WSJ

Wealthy taxpayers have inundated the Internal Revenue Service in recent weeks with requests to come clean for past tax evasion, amid a government crackdown on undeclared income from overseas accounts. The volume has been so great that Wednesday, the IRS issued a streamlined, three-page form for taxpayers seeking entry into its temporary voluntary-disclosure program. "Last week we had 400 -- four times as many as in all of last year," said IRS spokesman Frank Keith, who declined to provide more detailed figures.

Two main factors appear to be driving the clemency-seeking spree. The IRS disclosure program, which began in March and is set to end Sept. 23, offers Americans the possibility that they may face civil charges, which can carry lower penalties than criminal charges, for volunteering details of tax evasion. At the same time, the IRS and the U.S. Justice Department are pressing ahead with efforts to investigate taxpayers who failed to report income earned from undeclared accounts with Swiss bank UBS AG.

The UBS matter represents the government's highest-profile efforts to capture some of the billions of dollars in revenue lost to offshore tax evasion annually. Under U.S. law, every year taxpayers are required to declare income earned from foreign financial accounts. Countries with bank secrecy laws such as Switzerland have made it easier for Americans to conceal assets and income from the IRS. The U.S. attempt to pry open the centuries-old tradition of strict secrecy at Swiss banks gained traction in late 2007, when a former UBS private banker agreed to cooperate with U.S. tax and law enforcement authorities. In February, UBS agreed to a $780 million criminal settlement that called for UBS to turn over 250 names. In a separate civil matter, the IRS and Justice Department are trying to force UBS to hand over the identities of U.S. residents linked to 52,000 accounts.

(snip)

The IRS program promises clemency, but not a complete amnesty, to those who are accepted. A $1 million account earning $50,000 in unreported income annually from 2003 to 2008 might result in taxes and penalties that total $386,000 plus interest, according to IRS estimates. By comparison, the IRS estimates that a similar but unreported account might result in a $2.3 million in taxes and penalties, plus interest and the possibility of criminal prosecution.

The IRS's new form asks taxpayers to supply a digest of information that earlier was often gathered through face-to-face interviews with agency criminal investigators. Taxpayers must check boxes that describe their highest foreign account value and estimated unreported income for the years 2003 through 2008. It also asks for narrative explanations of where the funds came from, how the account was set up, who helped set it up and how contact with the bank occurred. Some of that information could provide the IRS with leads on outside consultants that helped arrange the tax-evasion structures.

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http://online.wsj.com/article/SB124887938516790353.html (subscription)

[ControlledDemolition]

1. K&R. Special focus on Wall Street 'G... Banskers' would be good! n/t

[Frustratedlady]

2. I would guess we won't be hearing many gripes from that crowd.

They won't get any sympathy from this corner. For someone to sit back and enjoy their wealth while the rest of us carry the load is criminal.

I hope we eventually hear how much was recovered.

[question everything]

3. And if one of the reason was that "socialist government"

so be it!