Knowledge is protection when the IRS is involved. I'm Darrin Mish, a tax attorney in Tampa with 32 years of experience representing taxpayers nationwide. Here's what I want you to understand.
It’s finally official. The number of account holders that Swiss bank UBS will reveal to the IRS under an agreement to settle their dispute will be 4,450. This is a small number compared to the 52,000 names of suspected tax dodgers who have accounts with the bank that contain assets worth billions that have escaped tax.
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Back in February, UBS released 250 names of American clients whom they helped to evade taxes and pay $780 million to avoid being prosecuted. The IRS has begun investigations into 150 of them. The day after these names were released on February 18th, IRS took the bank to court over the names of 52,000 more clients suspected of the same crime. In addition to the agreement between the two sides, the IRS has also been having a Voluntary Disclosure program in which those who have been evading taxes can voluntarily divulge details of their assets in exchange for a lighter penalty. This has put the onus on the account holders to choose whether to disclose their assets to the IRS and pay up their taxes with penalties and fines or stay mum and risk criminal prosecution. So far, three clients have stepped forward and a fourth is due to enter his guilty plea before a judge in September.
Since the release of the initial 250 names, the IRS has started prosecuting 2 UBS bankers in connection with this affair. One of them, Bradley Birkenfeld, pleaded guilty and has been cooperating with prosecutors, giving them vital information on a host of other parties who are also involved. Now the IRS has information on hundreds of attorneys, investigators, agents and other intermediaries to prosecute if investigations find them liable.
In the meantime, under the latest agreement between the IRS and UBS, the bank will release all the information on their clients to the Swiss government who will in turn decide on how much of the information will be given to the US government. Under the agreement, the process of finally handing over the details to the US could take up to one year and UBS will inform affected clients they can make an appeal under Swiss law to the Swiss Federal Administrative court to keep their accounts secret. They are also to inform the US Justice Department of their appeal.
The agreement allows the US to pursue other unnamed account holders as well. This marks a watershed in banking practice that presently disallows blanket inquires into such information.
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