March 6, 2021

Amnesty Program Yields Millions More in Back Taxes

The voluntary disclosure program, which was in effect from February until last week, is part of an initiative to deter tax evasion via offshore bank accounts. Since the I.R.S. began its previous amnesty program in 2009, more than 30,000 taxpayers have reported their secret overseas accounts, and the federal government has collected $2.7 billion in taxes and penalties.

The United States began its most recent offensive against offshore tax evasion in 2009, when the Justice Department reached a settlement with the Swiss bank UBS that required it to pay $780 million and reveal details about 4,500 clandestine accounts that were believed to hold undeclared assets of United States residents. Although the Swiss government has yet to authorize the release of information about those accounts, Douglas H. Shulman, the I.R.S. commissioner, said that the agency would continue to pressure tax evaders to come forward or face prosecution.

The I.R.S. has opened three international offices in recent years to help track overseas funds, and has been working more closely with Justice Department prosecutors to seek criminal charges in the most serious cases.

“The world has clearly changed,” Mr. Shulman said in a news conference on Thursday. “We have pierced international bank secrecy laws, and we’re making a serious dent in offshore tax evasion.”

Tax evasion by individual American taxpayers is estimated to cost the federal government tens of billions a year in lost revenue, according to various studies.

Many tax lawyers had been skeptical that the I.R.S. amnesty program, which imposes stringent penalties, would be enough to lure tax evaders out of hiding. In addition to requiring that taxpayers repay as much as eight years of back taxes, the I.R.S. also added a penalty equal to 25 percent of the highest balance of the overseas account from 2003 to 2010. But Mr. Shulman said that the number of people who came forward exceeded the agency’s expectations.

Many international tax lawyers agreed that the amnesty had been productive.

But George M. Clarke, a tax lawyer at Miller Chevalier, said that the amnesty had induced only a small fraction of those with unreported offshore assets to come forward.

“We know the UBS — one bank — had more than 4,500,” said Mr. Clarke, who has defended numerous clients accused of tax evasion. “So with all the other banks in Switzerland and all over the world, why didn’t the amnesty get 50,000, or 100,000?”

Though Mr. Shulman said that many Swiss banks no longer provided secret accounts, the disclosure program had indicated the breadth of the problem, revealing assets that American citizens had hidden in at least 140 countries. As the Justice Department has pressured UBS and other banks in Switzerland and Lichtenstein to disclose more information about American depositors, many citizens have moved their assets to Asia.

It is unlikely that the I.R.S. will offer any additional amnesty programs, but Mr. Shulman said that the government would continue to pursue offshore tax evasion aggressively.

“Not only are we bringing people back into the U.S. tax system, we are bringing revenue into the U.S. Treasury and turning the tide against offshore tax evasion,” Mr. Shulman said.

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