The IRS Voluntary Disclosure Program ended on October 15th.  For U.S. taxpayers who have been hiding money in Zurich, expect indictments and harsh prison sentences from the IRS.

By Michael Rozbruch, Certified Tax Resolution Specialist
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For the more than 4,450 U.S. taxpayers who have bank accounts in Switzerland and haven’t told Uncle Sam, time’s up.

In an unprecedented settlement with the Swiss government and Swiss bank UBS, the Department of Justice and Internal Revenue Service were promised information on accounts in the country held by Americans. The U.S. government suspects more than 4,450 U.S. taxpayers, nearly all of them wealthy, use UBS to shield money from taxes.

Anticipating access to a list of names and accounts, the U.S. government offered amnesty to those who might be on that list. The offer: come forward by Sept. 23 and you will not face criminal prosecution.

But the deadline has come and gone, and for those who decided to play the odds, the gamble does not appear to be a good one.

Among other things, the Swiss government announced in September that it would appoint at least five new judges in addition to 72 already sitting judges to review appeals related to the Swiss government’s release of banking information. That means appeals are going to be expedited, giving the U.S. government access to the data in as timely a manner as the Swiss government can offer.

Steven Michael Rubinstein of Boca Raton, Fla., the first person to be charged as part of the U.S. government’s scrutiny of UBS, pleaded guilty to filing a false tax return in 2004. He faces up to three years in prison.

Meanwhile, Robert Moran, of Lighthouse Point, Fla., another UBS client, pleaded guilty in April to tax fraud. Moran was the second person to be caught in the government’s UBS investigation, and he also faces up to three years in prison.

Shortly after Moran pleaded guilty, U.S. Attorney Alex Acosta, who oversaw the prosecution, said in a statement: “If you are hiding income abroad, I suggest you approach us.”

But it may be too late. Now that the government’s Sept. 23 amnesty deadline has passed, U.S. taxpayers hiding behind the Swiss bank veil will receive little sympathy from the Department of Justice and IRS. In fact, for many of these U.S. taxpayers, they are likely to be facing years in federal prison for their actions.

As IRS Commissioner Doug Shulman said when he originally announced the UBS deal: “Once the Swiss government turns over names, all bets are off.”

For several years now, the IRS has been in one of the most aggressive tax-enforcement phases of its history. As the slumping economy and a rising national deficit have put on more pressure, the IRS is becoming even more aggressive.

Tax amnesty is no longer available for offshore accounts, however, professional tax help can help reduce severe IRS penalties.  You can still seek amnesty even if you missed the IRS Voluntary Disclosure Program deadline but due to the severe penalites it is advised to have specialized tax representation by a tax attorney or IRS specialist.  Tax Resolution Services offers a free tax consultation.  Call us at 1-866-IRS-PROBLEMS or fill out our online free tax consultation form.

Michael Rozbruch is a Maryland CPA and a Certified Tax Resolution Specialist.  You can contact him at866-477-7762 to obtain a free subscription to his newsletter titled The IRS Times & Inquirer.

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This entry was posted on Tuesday, October 27th, 2009 at 11:50 am and is filed under IRS Times and Inquirer, IRS help, Seeking Professional Tax Help, Voluntary Disclosure, Working with the IRS. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.