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July 30, 2009
Tax Cheats Flock to IRS to Confess Their Sins
In today's Wall Street Journal: Tax Evaders Flock to IRS to Confess Their Sins, by Laura Saunders & Carrick Mollenkamp:
Wealthy taxpayers have inundated the IRS in recent weeks with requests to come clean for past tax evasion, amid a government crackdown on undeclared income from overseas accounts.
The volume has been so great that Wednesday, the IRS issued a streamlined, three-page form for taxpayers seeking entry into its temporary voluntary-disclosure program.
"Last week we had 400 [applicants] -- four times as many as in all of last year," said IRS spokesman Frank Keith, who declined to provide more detailed figures.
Two main factors appear to be driving the clemency-seeking spree. The IRS disclosure program, which began in March and is set to end Sept. 23, offers Americans the possibility that they may face civil charges, which can carry lower penalties than criminal charges, for volunteering details of tax evasion.
At the same time, the IRS and the U.S. Justice Department are pressing ahead with efforts to investigate taxpayers who failed to report income earned from undeclared accounts with Swiss bank UBS AG.
See also:
- Bloomberg, Rich Americans Reveal UBS Accounts Amid Negotiations
- New York Times, UBS and Justice Department Disagree on Progress of Case
- USA Today, IRS and UBS Still at Odds on List of Possible Tax Cheats
- Wall Street Journal, US Judge Seen Keeping Heat On UBS, IRS To Settle Pre-Trial
- Wall Street Journal Law Blog, How Common Is Offshore Tax Evasion?
- Web CPA, Toy Exec Pleads Guilty in UBS Tax Case
July 30, 2009 in News, Tax | Permalink
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Comments
While the 400 applicants is an impressive number, I have personally met with many clients who are not entering the voluntary disclosure program because they view the penalties as excessive (even though the penalties would be much more severe if the IRS discovers their identities, not to mention possible criminal consequences).
Posted by: A. Rubinstein | Jul 30, 2009 3:32:09 PM
A. Rubinstein - Of course penalties are "excessive." If they weren't, there would be no reason to take the chance that you might get caught. Penalties that are 10x the tax dodged still wouldn't deter a lot of people if the odds of being caught were one in 100.
That's why a parking meter costs $2/hour but the fine for not paying is $55 (at least where I live.)
Posted by: J. Wiedwald | Aug 1, 2009 7:38:01 PM
