MercoPress. South Atlantic News Agency

US taxman corners evaders hiding in foreign holdings

Swiss bank UBS agreed to hand over to the IRS names of 4.450 secret accounts

Rich Americans who have evaded taxes by hiding their foreign holdings have about a week to decide whether to turn in to an Internal Revenue Service amnesty program or gamble that they will not be caught.

US citizens with undeclared assets in tax havens such as Switzerland face a Sept. 23 deadline to reveal their holdings, pay a fine and generally avoid criminal prosecution. When that amnesty program expires, any tax cheats found by the government could face criminal prosecution.

The IRS expects to find some tax evaders soon. UBS AG, the Swiss banking giant, agreed to hand over to the IRS the names of about 4,450 secret accounts as part of a court settlement reached last month.

“This is sort of their last, best chance if they are going to get off with lenient treatment,” said Evan Stewart, a regulatory lawyer at the firm Zuckerman Spaeder.

“If you’re sitting there and you’ve sheltered $50 million from the U.S. government, are you willing to gamble with the (list of) 4,500 (names), and live in terror for a year?” Stewart said.

The IRS said that in one week of July, about 400 individuals turned themselves in under the amnesty program. That was four times higher than the number of tax-evaders who stepped forward in all of 2008, according to the agency.The IRS declined to provide any other figures about participation in its amnesty program.

IRS Commissioner Doug Shulman warned investors with money or securities in overseas accounts to step forward before the deadline. “Once the Swiss government turns over names, all bets are off,” he said when announcing the UBS deal.

It appears to be working. “They are all terrified,” said Ken Rubinstein, who handles such cases in New York.

Under the UBS settlement, the bank agreed to first hand over names of 500 clients within about two months to Swiss authorities, who will review them before sending the list to US officials. The remaining names will be submitted in a similar process by about May of next year.

At the same time, IRS officials have said that other foreign banks are being queried for possibly helping the wealthy evade taxes, although they have declined to be specific.

Lawyers say their clients include UBS holders but also those with funds at HSBC Holdings PLC Credit Suisse Group AG and in other offshore locations such as the Cayman Islands.