With an Internal Revenue Service deadline scheduled this week for U.S. citizens to reveal their undeclared assets in tax havens, a Connecticut law firm said the IRS has gotten a strong response.
The IRS ends its amnesty period Sept. 23 for alleged tax evaders such as those who have accounts with UBS AG in Switzerland.
After obtaining information on some 4,400 account holders from UBS, the IRS has not revealed the names or residences of people it is investigating. The landmark case peeled back for the first time the veil of secrecy over Swiss bank accounts.
In mid-September, a Swiss judge ruled three unidentified UBS customers in the United States could have access to documents, part of a lawsuit against the company for disclosing their account information to the IRS.
That investigation could soon spread to other institutions. According to Bloomberg News, the IRS is in the process of hiring individuals to monitor the “global high wealth industry,” with plans to assign the hires to its most-sophisticated division that typically audits corporations.
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The IRS is allowing UBS account holders to possibly sidestep any potential criminal prosecution by paying taxes and interest on any untaxed income over a six-year period as well as a 20 percent penalty on that income.
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The IRS has given no indication whether it would extend the amnesty period, according to Dan Gottfried, a tax attorney in the Hartford office of Day Pitney L.L.P., which also has offices in Stamford and Greenwich.
“The only way to resolve these tax compliance problems with a high degree of certainty is to enroll in the voluntary disclosure program, and taxpayers have a limited time to get into the program before the doors close.,” Gottfried said, in a brief updating clients on the IRS developments.
The response to the amnesty has been “overwhelming,” in the words of Stephen Ziobrowski, a partner in the Boston office of Day Pitney.
“Many clients come to us, unable to sleep at night due to their fear of being caught by the IRS,” Ziobrowski said. “Although the costs of voluntary disclosure are significant, clients often consider it a good investment to regain their peace of mind and ensure that their children or grandchildren do not someday inherit their tax problems.”
