Come out from the shadows, UBS tax dodgers; all is (sort of) forgiven. Spurred by increasing efforts by the Internal Revenue Service to identify potentially thousands of American UBS clients who used the Swiss bank’s wealth management to avoid paying taxes, several of these tax dodgers are voluntarily coming forward and admitting their guilt, avoiding criminal prosecution in the process.
The IRS has set up a voluntary disclosure program that allows UBS clients to acknowledge their tax evasion, paying back taxes in addition to a penalty—and avoiding any further risks of jail time. The program allows tax dodgers to come forward with the details and documentation of their evasion, and, through an attorney intermediary, negotiate a settlement.
The IRS and other U.S. authorities have been working for months to identify and prosecute systematic tax evasion among clients of UBS who used offshore tax withholding (legal in Switzerland) to hide assets from the U.S. government. The IRS believes about 20,000 American UBS clients hid up to $20 billion in assets through UBS-sponsored tax dodges.
The U.S. Department of Justice began probing UBS in June; since then, investigators have attempted to gain access to the internal records of the Swiss bank, with moderate success. UBS clients who come forward are banking that the IRS will be successful in uncovering the details of the thousands of tax dodges—prosecuting these cases is generally a difficult and costly undertaking.
The IRS is confident that offering amnesty will lead to better results for both regulators and tax dodgers. “We have a lot of names and we’re pursuing them aggressively,” said IRS commissioner Douglas Shulman. “People definitely will be better off if they come to us before we find them. And the chances of us finding them increase every day.”