IRS chief: “Next wave” for Swiss account probe

As the Internal Revenue Service continues culling through information it collected from people who have avoided taxes via secret accounts in Swiss banks,  the agency”™s commissioner said “the next wave” of investigations is underway.

IRS Commissioner Douglas Shulman said the agency is investigating those who helped taxpayers secrete money in overseas accounts.

In 2009, the IRS created a voluntary disclosure program for taxpayers who secreted income in overseas accounts, while bringing pressure on UBS AG to surrender account information. UBS, which has one of its largest U.S. offices in Stamford, ultimately complied, marking the first time U.S. authorities had pierced the wall of secret Swiss bank accounts.

On Monday, UBS is seeking dismissal of a lawsuit brought in a California federal court by a Russian billionaire, according to Bloomberg. Igor Olenicoff claims UBS is to blame for his failure to declare to the IRS $200 million held in offshore accounts, resulting in a $52 million penalty.

Speaking last week to the National Press Club, IRS Commissioner Douglas Shulman said the agency had hoped to get 1,000 disclosures. Instead, it has received 33,000 resulting in back taxes and penalties totaling $4.4 billion, with participants dodging potential jail time in exchange for their cooperation.

“We are now mining the information we have received to date and have launched our next wave of investigations on banks, bankers, intermediaries and taxpayers,” Shulman said. 

“We”™re bringing U.S. taxpayers back into the system ”“ back into compliance ”“ so they properly report and pay their taxes for years to come. We have fundamentally changed the risk calculus of taxpayers who are thinking about hiding their money overseas, and we are well on our way to deterring the next generation of taxpayers from using hidden bank accounts to cheat on their taxes.”

Beginning this year, Shulman noted, the IRS migrated from a weekly processing cycle to daily processing, with benefits including quicker tax-return processing and better analytics and compliance. That is already paying dividends under the IRS recent efforts to certify tax preparers, he added.

“We applied advanced data analytics to link tax returns that showed potentially serious compliance issues to the individuals who prepared them,” Shulman said. “We identified a number of preparers with apparently inaccurate returns and, depending on the type and severity of the issue, are applying different types of compliance tools.”