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Archive for Sunday, August 16, 2009

Tax dodgers scramble to come clean amid Swiss bank crackdown

August 16, 2009

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— A deal with Switzerland settling U.S. demands for the names of suspected tax dodgers from a Swiss bank has a lot of wealthy Americans with offshore accounts nervously running to their tax advisers — and the Internal Revenue Service.

“They are very frightened,” said Richard Boggs, chief executive of Nationwide Tax Relief, a Los-Angeles-based tax firm that specializes in clients with tax debts exceeding $100,000. “You have the super rich who are not used to being pushed around and they are finding themselves in unfamiliar territory.”

The U.S. and Swiss governments announced a court settlement last week in efforts by the IRS to force Zurich-based UBS AG to turn over the names of some 52,000 Americans believed to be hiding nearly $15 billion in assets in secret accounts.

Justice Department and UBS lawyers told a federal judge in Miami in a brief conference call Wednesday they had initialed a final deal. But they did not disclose any details, such as how many of the 52,000 names sought by the IRS will be revealed.

Even before the settlement, the high-profile case — coupled with other U.S. efforts to go after Americans hiding undeclared assets — has scared hundreds of tax dodgers to turn themselves in. Boggs said his firm has been taking on 100 new cases a month, a big increase over previous years.

Peter Zeidenberg, a litigation partner at the law firm DLA Piper in Washington, said he, too, is seeing more people with undeclared assets seeking information about their legal options.

His advice: “I don’t think you have much of a choice but to come forward. ... I think the landscape is permanently changed.”

The IRS long has had a policy that certain tax evaders who come forward before they are contacted by the agency usually can avoid jail time as long as they agree to pay back taxes, interest and hefty penalties. Drug dealers and money launderers need not apply.

But if the money was earned legally, tax evaders can usually avoid criminal prosecution.

In March, the IRS began a six-month amnesty program that sweetened the offer with reduced penalties for people with undeclared assets. IRS Commissioner Doug Shulman said the response has been unprecedented.

Shulman wouldn’t say how many people have applied so far. But the IRS said 400 people applied to voluntarily disclose undeclared assets in a single week in July, compared with fewer than 100 applications all last year.

The amnesty program, which ends Sept. 23, is part of a larger effort by federal authorities to crack down on international tax evaders.

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