IRS Intensifies Global Hunt for Secret Offshore Bank Accounts
(bloomberg.com) The IRS is intensifying its hunt for secret offshore banking, opening offices in Beijing, Sydney and Panama City after more than 7,500 Americans revealed undeclared accounts in 70 countries on six continents.
Internal Revenue Commissioner Douglas Shulman said yesterday Americans coming forward before today’s deadline to take advantage of a partial amnesty have revealed accounts ranging in value from $10,000 to more than $100 million. The partial amnesty won’t be extended, he said.
Americans with undeclared offshore accounts have been under growing pressure since Switzerland agreed Aug. 19 to hand over data to the U.S. on as many as 4,450 UBS AG accounts to settle a lawsuit in which the U.S. had sought as many as 52,000 accounts.
“We’re going to be scouring the 7,500 disclosures to identify financial institutions, advisers and others” who helped taxpayers skirt their obligations, Shulman said on a conference call with reporters. “This entire effort is not just about UBS and a single country.”
It isn’t yet known how much overlap might exist between the 4,500 names that UBS will eventually provide and the 7,500 people who have come forward to the IRS, Shulman said.
As part of its efforts, the IRS also intends to hire more than 800 new employees in the next year and add staff to eight existing overseas offices, including Hong Kong and Barbados.
‘Strong Response’
“We have seen a very strong response to the program and I am very pleased with the results,” Shulman said.
Taxpayers disclosed assets that came from inheritances, profits skimmed from U.S. businesses, and international business transactions, he said.
U.S. lawmakers praised the IRS program and called for stronger laws to help the agency.
Senator Carl Levin, a Michigan Democrat whose Permanent Subcommittee on Investigations has held two hearings into how UBS solicited Americans to put assets in Swiss banks, said he’ll keep pushing legislation to give the IRS more tools. He said he plans to offer his proposal as an amendment to a health-care measure the Senate will debate later this year.
“Many Americans are losing confidence in the ability of tax-haven banks to hide their assets,” Levin said. “But it is also clear that thousands of other taxpayers are still in the shadows, working to keep their offshore accounts hidden.”
Montana Democrat Max Baucus, chairman of the Senate Finance Committee that oversees the IRS, is drafting his own legislation to double financial penalties on those who avoid taxes by moving money offshore.
‘Encouraging News’
He called the 7,500 disclosures “encouraging news” that demonstrates IRS progress.
“With record deficits and a weakened economy, we owe it to honest taxpayers to set an aggressive agenda that puts an end to offshore tax evasion once and for all,” Baucus said.
Under the IRS program announced in March, the tax agency will take 20 percent of an account’s assets based on its peak value in the previous six years. In cases of inactive accounts, the agency will confiscate as little as 5 percent.
Ordinarily, the IRS can seize the higher of $100,000 or 50 percent of an offshore account’s value when the holder deliberately doesn’t disclose the account to the Treasury Department. The penalty can apply each year that required forms aren’t filed, so after three years of noncompliance an account holder can owe 150 percent of the account’s value.
Avoiding Prosecution
People who come forward voluntarily can avoid criminal prosecution and their identities will remain a secret under federal law requiring tax records to be kept confidential.
George Clarke, a tax lawyer at the Washington-based Miller & Chevalier firm, who is representing about 20 people seeking leniency in the program, said the IRS’s announcement indicates the agency is positioning itself to more efficiently hunt tax cheats.
“It seems like they are systemizing it, which is trouble for people who don’t want to come forward,” he said. “They are more effective when they systemize it.”
Shulman said the IRS is building on the information it has received, and declined to estimate how much money the IRS will capture.
“You add all these efforts up and it means increased risk for anyone hiding assets offshore,” Shulman said. “In the coming weeks and months our efforts will only intensify.”
The voluntary disclosure program isn’t open to taxpayers already under scrutiny by the IRS. Since December 2007, six UBS clients have pleaded guilty and a seventh has agreed to do so. A UBS banker pleaded guilty; two were indicted; and three Europeans were charged with enabling U.S. tax evasion.
The Justice Department has said 150 taxpayers are under criminal investigation.
To contact the reporter on this story: Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net
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Original Source: http://www.bloomberg.com/apps/news?pid=20601087&sid=abSen_erXmTk
Date Retrieved: October 15, 2009
