IRS Hunt for Tax Cheats Accelerates as Swiss Banks Shut American Accounts
Swiss banks are shutting the accounts of Americans as the Internal Revenue Service accelerates the hunt for tax dodgers. The country’s biggest banks, UBS AG and Credit Suisse Group AG, have told Americans to move their money into specially created units registered in the U.S., or lose their accounts. Smaller private banks such as Geneva-based Mirabaud & Cie. are closing all accounts held by U.S. taxpayers.
After the American government’s legal battle to get UBS to disclose the owners’ names for 52,000 accounts in which Americans evaded taxes - the IRS announced a new Voluntary Disclosure process that offers leniency to taxpayers with unreported income relating to offshore transactions. Along with lower tax penalties, those who come forward, pay their taxes, and comply with the IRS are expected to avoid criminal prosecution.
Until now, the IRS could impose penalties of at least 50% for all years in which an account wasn’t disclosed. In some cases, that could exceed the value of the offshore holdings. But voluntary disclosure isn’t about how much you end up paying, it’s about being able to avoid jail time.
While the IRS has since increased pressure on Americans to disclose offshore accounts, Swiss banks must comply with U.S. tax rules and register with the Securities and Exchange Commission to accept a investment from a U.S. person.
According to Bloomberg:
While the banks declined to say how many people are affected, more than 5 million Americans live abroad, including about 30,000 in Switzerland, according to estimates from American Citizens Abroad in Geneva. Swiss banks must register with the Securities and Exchange Commission to provide services for those customers.
SEC registration means clients don’t enjoy the protection of Swiss banking secrecy laws, which make it a crime for money managers to disclose the names of clients without their consent. Switzerland said in March it would cooperate with international tax evasion probes after Zurich-based UBS admitted helping U.S. clients avoid taxes.
The IRS has since increased pressure on Americans to disclose offshore accounts as it seeks to recoup an estimated $50 billion in unpaid taxes. The agency set a deadline of Sept. 23 for taxpayers to declare all foreign accounts or face possible criminal prosecution that could result in as much as 10 years in prison and $500,000 in penalties.
Presumption of Guilt
U.S. citizens must file tax returns, report offshore accounts that contain more than $10,000 and pay tax on any income earned, no matter where they live. To take advantage of the amnesty program, taxpayers must file six years of returns, plus pay back taxes and a penalty, according to the IRS.
If you owe the IRS more than you can afford to pay, get help from the specialized staff of tax attorneys, CPAs, EAs and tax professionals at TRS. Visit Tax Resolution Services for a free income tax relief consultation or call us at 866-IRS-PROBLEMS (1-866-477-7762).
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July 2nd, 2009 at 4:25 am
we should back off with this “bullying” stuff to the Swiss. very quickly all countries will see this as a precedent and start demanding of the US that we reveal the names of citizens of their countries that invest in the US, so they can tax them in their home country.
You must know that non-resident aliens and foreigners pay no capital gains or dividend taxes in the US and we don’t reveal their names because of our privacy laws.
That is why it is hipocracy for us to demand that the Swiss break their privacy laws to conform to our tax laws.
If all foreigners pull their money out of our country, our economy would crash.
Obama and his croneys should be standing up to Iran and North Korea instead of the Swiss. It doesn’t take much courage to bully a country that can’t fight back.
July 14th, 2009 at 12:44 am
That is why it is hipocracy for us to demand that the Swiss break their privacy laws to conform to our tax laws.
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Smarry
August 3rd, 2009 at 5:30 am
As a person born in the US by accident and who spent only the first 3 years of his life there, I am expected to pay the US taxes my whole life. This is despite the US refusing to give my family (wife and children) US citizenship, and my never having worked or lived there since the age of 3.
For people who have a real connection to the US, and are perhaps working as expats, and perhaps have non-declared income and funds abroad, I can understand the pursuit. It would be the same with any country’s tax authorities, including Switzerland. That said, the US imposing it’s will on the sovereign laws of another country is deplorable, and makes me ashamed of that miniscule part of me that is obliged to be american.
I am fortunate to be a dual citizen, and will soon be forfeiting my US citizenship.
August 25th, 2009 at 6:02 am
[...] $18 billion hidden in these offshore accounts–giving the IRS plenty reason to scrutinize and audit both the innocent and guilty in the upcoming [...]