Evading Taxes Is “Unamerican” : Swiss Banks Come Clean

I.R.S. Commissioner Doug Shulman warned U.S. taxpayers hiding money overseas that it was time to come clean with Uncle Sam.

This is what was implied by the Obama-Biden Presidential Campaign.  Too bad that many of President Obama’s team of advisers, initially touted for its wealth of experience and qualifications, have come under the radar for this very “unamerican” activity. Nancy Killefer nominated for chief performance officer,  Treasury Secretary Timothy Geithner and health czar-designee Tom Daschle are all examples.

In the Vice-Presidential debates, Jo Biden had also hinted that Americans with money abroad were “unamerican.” What he implied was not merely the fact that they had money abroad but that it was stored in undeclared bank accounts and that they did not pay tax on interest earnings.

Switzerland has historically been a tax haven for Americans (and citizens of other nationalities) however this is about to come to an end as UBS, the largest bank in Switzerland, has agreed “to divulge the names of well-heeled Americans whom the authorities suspect of using offshore accounts at the bank to evade taxes. The bank admitted conspiring to defraud the Internal Revenue Service and agreed to pay $780 million to settle a sweeping federal investigation into its activities.” (New York Times)

Unlike in the United States, tax evasion is not a criminal offense under Swiss law. UBS’s offshore private banking business once employed private bankers in Lugano, Zurich and Geneva who referred clients to lawyers and accountants who set up secret offshore entities to conceal assets from the I.R.S. The bank has admitted that it urged some American clients to destroy paper trails to assets purchased with money hidden offshore in safe deposit boxes in Switzerland and encouraged them to use Swiss credit cards so the I.R.S. could not track purchases.

I.R.S. Commissioner Doug Shulman warned U.S. taxpayers hiding money overseas that it was time to come clean with Uncle Sam.

“People who have hidden unreported income offshore need to get right with their government. They should come forward and take advantage of our voluntary disclosure process,” Shulman said.

A voluntary disclosure does not necessarily get you completely off the hook because it does not automatically guarantee immunity from  prosecution. However, it might result in avoiding prosecution.  This practice does not apply to taxpayers with illegal source income.

Click here for more information about the I.R.S.’s Voluntary Disclosure scheme.

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