disorderlyvision
09-21-2009, 04:57 AM
http://www.bloomberg.com/apps/news?pid=20601085&sid=adXVfTKWkz9Q
Sept. 21 (Bloomberg) -- The Internal Revenue Service will extend until Oct. 15 the ability of Americans with undeclared offshore accounts at UBS AG and other banks to avoid criminal prosecution and some fines if they disclose their holdings, a government official familiar with the program said.
The agency will delay a Sept. 23 deadline at the request of accountants and tax lawyers who are experiencing an influx of inquiries and need more time to prepare formal “voluntary disclosure” applications under the program, the official said. More than 3,000 people have come forward since the IRS announced the partial amnesty in March, the official added.
Americans with large 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. The IRS says it expects to handle as many as 10,000 cases related to the matter and about half will come from the voluntary disclosure program.
“This is a positive step,” said Stuart Bassin, a partner at the Washington law firm Baker & Hostelter LLP and a former senior litigator in the Department of Justice Tax division. “This gives everybody a couple of weeks to digest what’s happened in the last three weeks and get their paperwork together.”
UBS spokeswoman Allison Chin-Leong didn’t immediately return a call and e-mail seeking comment.
Names of Clients
The IRS has already received 250 names of UBS clients from a Feb. 18 settlement by the bank to avoid criminal prosecution, Commissioner Douglas Shulman said Aug. 19. The tax agency has described the names that may be turned over by the Swiss government in phases as the cases in which it’s most interested.
On March 26, the IRS announced a six-month voluntary disclosure program that requires people with income in undeclared bank accounts to amend six years worth of tax returns, pay back taxes and some penalties.
Those who come forward may be able to avoid criminal prosecution and the IRS may seize a smaller amount of an account’s assets than it would be entitled to otherwise under the law.
The IRS can confiscate the higher of $100,000 or 50 percent of an offshore account’s value when the holder deliberately doesn’t disclose the account to Treasury. The penalty can apply each year the form isn’t filed, so after three years of noncompliance the account holder can owe 150 percent of the account’s value.
Peak Value
Under the IRS program announced in March, the tax agency will take 20 percent of the account’s assets based on its peak value in the previous six years. In cases where the accounts were inactive, the agency will confiscate as little as 5 percent.
Pamela Olson, a partner at the law firm Skadden Arps and the former head of the Treasury Department’s tax policy office, called the IRS decision to extend the deadline until Oct. 15 “a good move” because it will yield more confessions.
“There are still people who could use more time to get everything sorted out and get their affairs in order,” Olson said.
Bassin said the disclosure program is also in the government’s best interest because “they can’t litigate and investigate 50,000 people at the same time.”
Bassin said the 3,000 people who have come forward dwarfs the IRS’s usual voluntary disclosure programs. The government official, who spoke on condition he remain anonymous, said the IRS received less than 90 voluntary disclosure applications in 2008.
Criminal Probes
Even as the IRS tries to lure voluntary disclosures, the U.S. Justice Department has ramped up criminal probes, so far prosecuting two UBS bankers, five of its U.S. clients, a Liechtenstein adviser, a Swiss lawyer, and a manager at Zurich- based Neue Zuercher Bank.
Also, Sept. 23 is the deadline to file a separate form with the Treasury Department called the Report of Foreign Bank and Financial Accounts, an annual disclosure for Americans who own accounts valued at more than $10,000 in other countries. Oct. 15 is the deadline for filing 2008 tax returns.
The disclosure program and the U.S. lawsuit settled by UBS are helping the U.S. squelch offshore tax evasion by pursuing financial institutions and intermediaries including law firms, Shulman said last month. The U.S. loses $100 billion a year through offshore tax evasion, estimated U.S. Senator Carl Levin, a Michigan Democrat.
Lawrence Horn, an attorney at Sills Cummis & Gross in Newark, New Jersey, said the government stands a better chance of recovering that money by extending the deadline.
“The money is coming in, why turn off the faucet?” he said. “It would be in my opinion a mistake for the Internal Revenue Service not to extend this program at least until Thanksgiving, if not the end of the year, in view of how successful it’s been. The government doesn’t lose anything by extending.”
Sept. 21 (Bloomberg) -- The Internal Revenue Service will extend until Oct. 15 the ability of Americans with undeclared offshore accounts at UBS AG and other banks to avoid criminal prosecution and some fines if they disclose their holdings, a government official familiar with the program said.
The agency will delay a Sept. 23 deadline at the request of accountants and tax lawyers who are experiencing an influx of inquiries and need more time to prepare formal “voluntary disclosure” applications under the program, the official said. More than 3,000 people have come forward since the IRS announced the partial amnesty in March, the official added.
Americans with large 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. The IRS says it expects to handle as many as 10,000 cases related to the matter and about half will come from the voluntary disclosure program.
“This is a positive step,” said Stuart Bassin, a partner at the Washington law firm Baker & Hostelter LLP and a former senior litigator in the Department of Justice Tax division. “This gives everybody a couple of weeks to digest what’s happened in the last three weeks and get their paperwork together.”
UBS spokeswoman Allison Chin-Leong didn’t immediately return a call and e-mail seeking comment.
Names of Clients
The IRS has already received 250 names of UBS clients from a Feb. 18 settlement by the bank to avoid criminal prosecution, Commissioner Douglas Shulman said Aug. 19. The tax agency has described the names that may be turned over by the Swiss government in phases as the cases in which it’s most interested.
On March 26, the IRS announced a six-month voluntary disclosure program that requires people with income in undeclared bank accounts to amend six years worth of tax returns, pay back taxes and some penalties.
Those who come forward may be able to avoid criminal prosecution and the IRS may seize a smaller amount of an account’s assets than it would be entitled to otherwise under the law.
The IRS can confiscate the higher of $100,000 or 50 percent of an offshore account’s value when the holder deliberately doesn’t disclose the account to Treasury. The penalty can apply each year the form isn’t filed, so after three years of noncompliance the account holder can owe 150 percent of the account’s value.
Peak Value
Under the IRS program announced in March, the tax agency will take 20 percent of the account’s assets based on its peak value in the previous six years. In cases where the accounts were inactive, the agency will confiscate as little as 5 percent.
Pamela Olson, a partner at the law firm Skadden Arps and the former head of the Treasury Department’s tax policy office, called the IRS decision to extend the deadline until Oct. 15 “a good move” because it will yield more confessions.
“There are still people who could use more time to get everything sorted out and get their affairs in order,” Olson said.
Bassin said the disclosure program is also in the government’s best interest because “they can’t litigate and investigate 50,000 people at the same time.”
Bassin said the 3,000 people who have come forward dwarfs the IRS’s usual voluntary disclosure programs. The government official, who spoke on condition he remain anonymous, said the IRS received less than 90 voluntary disclosure applications in 2008.
Criminal Probes
Even as the IRS tries to lure voluntary disclosures, the U.S. Justice Department has ramped up criminal probes, so far prosecuting two UBS bankers, five of its U.S. clients, a Liechtenstein adviser, a Swiss lawyer, and a manager at Zurich- based Neue Zuercher Bank.
Also, Sept. 23 is the deadline to file a separate form with the Treasury Department called the Report of Foreign Bank and Financial Accounts, an annual disclosure for Americans who own accounts valued at more than $10,000 in other countries. Oct. 15 is the deadline for filing 2008 tax returns.
The disclosure program and the U.S. lawsuit settled by UBS are helping the U.S. squelch offshore tax evasion by pursuing financial institutions and intermediaries including law firms, Shulman said last month. The U.S. loses $100 billion a year through offshore tax evasion, estimated U.S. Senator Carl Levin, a Michigan Democrat.
Lawrence Horn, an attorney at Sills Cummis & Gross in Newark, New Jersey, said the government stands a better chance of recovering that money by extending the deadline.
“The money is coming in, why turn off the faucet?” he said. “It would be in my opinion a mistake for the Internal Revenue Service not to extend this program at least until Thanksgiving, if not the end of the year, in view of how successful it’s been. The government doesn’t lose anything by extending.”