Offshore Account Holders Come Out
TAXPAYERS SEEK SHELTER OF VOLUNTARY DISCLOSURE PROGRAM
The Internal Revenue Service (IRS) and U.S. Department of Justice (DOJ) released details on the highly-publicized settlement completed with Swiss banking giant UBS AG. (UBS) The civil and criminal investigation into UBS and its U.S. Account holders commenced in June of 2007 when the IRS has suspicions of gross negligence of U.S. Tax Law. The Department of Justice believe that approximately 19,000 U.S. Taxpayers have taken advantage of 52,000 UBS accounts to cover up $18 billion in assets or $300 million in taxable income.
UBS and DOJ entered into an understanding whereby UBS would comply with the DOJ if they agreed not to prosecute UBS if certain conditions were met. Including the voluntary disclosure of specific account information on U.S. Taxpayers who used UBS offshore accounts to hide assets and failed to report income related to those assets for the purpose of escaping U.S. Tax law.
The IRS also initiated the Offshore Settlement Initiative Voluntary Disclosure Program as a way for taxpayers to disclose their offshore accounts and get around the harshest of penalties. U.S. Taxpayers that do not voluntarily disclose offshore accounts, whom the government decides to prosecute, will possibly face incarceration time and severe high dollar penalties if found guilty. The DOJ will likely charge UBS account holders with willful failure to declare a foreign account, which is a pretty simple criminal case for the DOJ to prove.
U.S. Tax law stipulates that offshore assets on U.S. tax payers individual tax returns including their filing a Foreign Bank Account Report or F.B.A.R. is required to be disclosed.Recently, 14,700 U.S. Taxpayers in order to avoid severe penalites of violating this law agreed to participate in the IRS Voluntary Disclosure Program.
Further, the IRS has released the guidelines set forth in the settlement that has led UBS to turnover thousands of U.S. Taxpayer clients. The criteria serves as a guidebook to future investigations as the IRS and DOJ continue to investigate and prosecute U.S. Taxpayers who fail to divulge their offshore assets to the U.S. Government.
According to the IRS Commissioner Doug Shulman the UBS investigation was the tip of the iceberg. The U.S. Government has information on banking centers in over seventy countries""not just Switzerland. The IRS and DOJ are investigating U.S. Taxpayers with undisclosed offshore accounts at many institutions around the world""not just UBS clients. It is a reality that offshore tax evasion is rampant and will likely remain a top enforcement priority for the U.S. Government for years to come.
U.S. Taxpayers hiding undisclosed offshore accounts are strongly advised to seek professional counsel on the voluntary disclosure of their offshore accounts before the U.S. Government and/or the IRS notifies them.
by: Kevin Thorn
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