Tax Lawyer's Blog

The Wall Street Journal said time is running out for many UBS investors to make  voluntary disclosure of their offshore holdings:

If UBS discloses names and information as part of a settlement, the IRS will “generally not accept a voluntary disclosure from anyone on that list,” says Scott D. Michel an an attorney at Caplin & Drysdale in Washington, D.C.

Further, he adds, a settlement in this case “could come any day and be accompanied by disclosure.”

So, unless the IRS gives everyone until Sept. 23, the expiration date for a settlement initiative now in place, the window for voluntary disclosures may be closing fast for many.

[Bryan Skarlatos, a partner at New York law firm Kostelanetz & Fink] says that, generally, account holders who have already made a clean breast to the IRS are sleeping soundly; others, who haven’t yet come forward, are on tenterhooks. “Most people with UBS accounts are very concerned”, Mr. Skarlatos adds, while those with other Swiss bank accounts are less worried because they figure they still have time to come in even after the UBS case settles.

“It is interesting to see how people handle the risks involved,” says Mr. Skarlatos. “Some can live with the uncertainty and others get very, very scared.”

A UBS-US settlement may be finalized at any moment. An American investor whose name is disclosed to the IRS as part of the settlement will no longer be eligible to participate in the voluntary disclosure program and can expect the IRS to purse him or her to the fullest extent of the law.

IRS Commissioner Doug Shulman has gone on record as saying that the IRS will have zero tolerance for UBS investors who attempt to hedge their bets by waiting to see if their names are disclosed and then, if and when they are, making voluntary disclosures in the hopes of avoiding criminal sanctions and reducing penalties.

This makes sense, of course.

If UBS investors who wait until the last minute to make voluntary disclosure get the same relief as those who filed earlier, it will emasculate the partial amnesty program by deterring other taxpayers from making voluntary disclosure in the future.

The IRS has no choice.

It must prosecute to the fullest extent of the law those UBS investors who do not come forward voluntarily.

Related Posts:

• First UBS Client Found Guilty of Tax Evasion, More to Follow
• United States Sues UBS to Force Disclosure of American Taxpayer Names
• UBS Offshore Tax Fraud Update

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