Keep the pressure up on tax evaders

August 14, 2009

When I first read the New York Times article saying U.S. authorities are building criminal cases against 150 wealthy UBS clients, I had to do a double-take.

Just 150?

That couldn’t be right. After Bradley Birkenfeld turned over his Rolodex to U.S. authorities last year, tens of thousands of clients looked to be in the cross-hairs of a U.S. government itching to crack down on tax evaders protected by the world-renowned Swiss secrecy laws.

The timing of the leak to the New York Times, however, suggests the government is keen to keep the heat on other potential lawbreakers, whether they have accounts with UBS or other offshore banks.

And they should. In a world of spiraling federal deficits and a deepening perception that the rich are held to different standards, the government needs to come out swinging to show it’s serious about cracking down on tax evasion.

Limited resources and difficulties in proving wrongdoing have led many wealthy Americans in the past to play a numbers game: sit tight and hope the tax man doesn’t come knocking on your door.

Keeping the prosecutions front and center, however, may make for sleepless nights for some people, especially when the amounts involved make jail time more likely.

On Friday, Reuters reported that a Malibu, California man, John McCarthy, faces up to five years in prison, three years’ supervised release and up to $250,000 in fines for what the government estimates was a tax loss of $200,000 to $400,000.

Hopefully, the 150 will be just the beginning of a long list of prosecutions, but, more importantly, the catalyst to push some fence sitters into voluntarily fessing up.

It can be attractive: no criminal prosecution, lower penalties, and for those who could be ruined by indictment, confidentiality. (Not everyone will qualify for this amnesty, however).

Though the details of this week’s agreement between the Swiss government and the Justice Department haven’t been disclosed, estimates are that from 3,000 to perhaps more than 10,000 names of UBS account holders could be handed over to U.S. authorities as a result.

That’s many fewer than the 52,000 initially requested, leaving many to guess: will I or won’t I be on the list?

Now’s the time to make tax evaders squirm, so that maybe, just maybe, they’ll opt to pay up.


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lets turn the pressure on our elected officials to cut spending and eliminate taxes.. ehh

nice article though

Posted by dvictr | Report as abusive

To be effective, the (limted amnesty) catalyst program must be sufficiently specific, be offered by someone with authority, and have clear deadlines.

For instance the carrot (limited amnesty) could assure three benefits to each of the estimated 3,000 to 10,000 USB clients (including former clients) who are accepted into the program.

The benefits could be (1) confidentiality of the client’s name that is disclosed under this USB agreement, (2) waiver of half of the interest and penalties for the client’s failure to file and failure to pay U.S. taxes related to the client’s USB accounts, and (3) no U.S. criminal indictment of the client related to the information the client discloses under the program.

The carrot could be dangled by a specified Treasury official authorized to administer the program.

As Agnes Crane stated, not everyone would qualify for limited amnesty.

I suggest that, to qualify, a USB client (or former USB client) must first give written notice to the Treasury official within 30 days of the program’s beginning.

The written notice could be required to state that the client (1) might have had funds in USB and (2) requests assurances from Treasury that limited amnesty will be granted to the client to the maximum extent permitted under the program.

There would be a subsequent uniform deadline for each USB client to disclose additional required information to Treasury.

Any client’s failure to timely file the notice and/or the additional required information about the relevant USB account would preclude that client from receiving any benefit under the program.

Posted by H Parker | Report as abusive

The assumption that the Government has the right to tax all money until it is gone is what is wrong. These are not Tax evaders, they are protecting their property from confiscation by out of control politicians. It is only sad that the entire population can’t protect their money as well. How about telling the jackasses in the government to NOT tax income as the constitution was originally written. If that is too complex, how about just spending money on reasonable expenses and at costs that are real and not inflated by unions, regulation and corruption. That alone would save more money than whatever is collected from these so-called tax evaders.

Posted by Political Shaman | Report as abusive

Theres always going to be a (split)half want this , or close to half and half want that? “The” United states. It seems I was caught up in that same crowed. Obama this and Obama that ? I’m starting to see. This guy has tried to do more than any other president. What (more) do I mean. Perfect example. What president (ever) tried to get these tax cheats in Switzerland! even. The “tax cheat capitol” of them all! Tackeling health care! This guy has Gonads of steel! Name me a president?! That cared about the little person like me? I’m as poor as they come. If I make 20,000 a year I’m rich. I’ve busted my hump my whole life. The IRS took $1075.00 from me last year because of some mistakes on my part. I needed that money!? these rich people need to pay up. If you live in the U.S. pay up! health care! whats that? I’ve never had it? Ever! The premiums would kill me in a month. Like my car insurance. I wonder if these rich people know what its like to LIVE for a car insurance payment? so i can make it to work to (pay my/your taxes!) which by the way (quartly) is putting me out of business!?

I make >$1M/yr and dutifully pay my taxes every April, and it frosts me to contemplate other Americans enjoying the same benefits from our country but intentionally avoiding paying for their share. Sure, there’s waste and inefficiency in the current policies & practices; sure, there are things I would like to see changed. Tax dodging doesn’t attempt to fix _any_ of that; it simply causes honest taxpayers to have to pay more.

keep the pressure on for folks hiding money from the US taxman. For the corporations, make it a every few year requirement so it does not get out of balance with our national needs.

Posted by UHOOTHEGOSSIP | Report as abusive

way to go US Treasury very funny stuff

Posted by Tim K | Report as abusive

The rich man does wrong and boasts of it, the poor man is wronged and begs forgiveness

Posted by Frank | Report as abusive

No amnesty for evaders. The IRS has very well developed procedures for dealing with this. You do amnesty to bring forth those you don’t have evidence against. In this case they don’t need that, so no special consideration is needed – especially no confidentiality. The wealthy had a very nice run the last several years, but that’s OVER.

Can’t do time, don’t do crime.

Posted by Xenophon | Report as abusive

Hooray, the clowns are going after the wealthy. Several problems with this:

1. When they uncover the fact that these secretive accounts are how our political leaders have covertly been accepting bribes from wealthy contributors – that may pose a problem.

2. All of our money is based on debt, our gov’t is starting to realize that they can not pay off the interest on the debt that is owed to the Federal Reserve and various others. They are scrambling because the day of reckoning for the dollar is coming. When our interest payment exceeds our IRS intake the dollar goes boom. “Welcome to Barter Town.”

Posted by Brian | Report as abusive

All who live in the US should pay their fair share, as Ben’s comment quite rightly states, I do not want to have to pay for their share–the tax evaders hurt everyone who’s honest.

Posted by Greg | Report as abusive

Amnesty? Confidentiality? For what? Cheating millions of honest Americans out of money to pay for ‘their’ share of taxes? NO WAY. Execution is the ticket. Shoot a few of these tax cheats and watch these thieves scramble. Do like China does and execute people like these. They just executed a guy who ran some of their airports because he was taking bribes. Do the same here.

Posted by William Thomas | Report as abusive

Amnesty is necessary to remunerate/support the tax-cheat turned confidential informer/witness (stinger)over period of investigations, dragnet arrests and trials. Stingers who turn over big money tax-cheats will likely turn a profit and stay out of jail and/or have clean criminal records.

Posted by DFPetrano | Report as abusive

amnesty? i don’t think so. What makes these people think they are in any position to negotiate? …i think the answer to that is “the laws don’t apply to me” attitude.

the broader issue is waste and inefficiency in the government, which makes our tax payments higher – be they dems or repubs.

i say fine and prosecute them all, just like we would do for any other crime. forget the carrot, they don’t deserve it; they are criminals.

makes me sick, i can’t say enough.

Posted by brad | Report as abusive

I don’t see what is so hard to understand about this. Even if they do start to tax the rich, ultimately the cost of the taxation will trickle down to the lowly taxpayer in the middle to lower income bracket. The wealthy own the businesses, they employ all you people who are complaining that the rich should pay. Even though their taxes will be higher it will be you who pays as the cost for goods rises to compensate their tax losses. The rich never lose, that is why they are rich and your not. Time to start reading about history / economics and stop watching the f*ing television. Get off your fat a**es America.

“Government of the people, by the people, for the people”

Posted by Brian | Report as abusive

Is former U.S. senator Phil Gramm still a vice-chairman of UBS?

See:  /08/14/phil-gramm-aboard-foundering-swi ss-bank/

Coddle the rich, they’ll take advantage of it. The income tax is constitutional so I’ve had enough of people talking about the “illegal” income tax; grow up, it’s not going away. And I’d guess they’re the same folks who claim to be for law and order, just as long as it’s not them having to obey laws. Hypocrisy pure and simple. Enough.

Posted by borisjimbo | Report as abusive

It is an illusion that tax-paying americans have to pay the taxes that “evaders” keep. Have you ever seen an extra deduction on your salary statement, saying something like “extra tax to compensate for evaders”?
Ridiculous, people! Absolutely no grounds to assume that.

Whether these people pay their taxes or not, you will still have to pay the same amount of taxes on your own salary.
And to the guy who is “poor as they come”, you said you needed that tax money they took from you. Why do you think they have the right to do it? Why do you think the money you have earned with your hard work and effort, is not actually yours, but theirs? What is just about that?
And what is just about forcing you, poor man, to pay for whatever weird programs and expenses and ridiculous politician salaries the government comes up with?

Talk about justice, people! Not legality.

Posted by free | Report as abusive

Let the government put itself into the crosshairs first. Make it mandatory that all elected and appointed polititicans be audited first. Let the same penalties apply to those with political ties. The Obama team can start with Geithner, etal… Get those in government first. Set an example of how it will be done and I’m sure those in the private sector will see that the Obama administration leads by example.

Posted by peanut1000 | Report as abusive

I’m just pissed this guy rolled over for 2.5 years removed of 5! All that to throw away private banking for everyone! And is the US just going to ASSUME that all US citizens who bank privately have broken the law? What about probable cause? I can’t believe the Swiss are going to roll over like this. I have to assume they were given something HUGE by the U.S. government. Who the heck will ever bank with those guys ever again!

Posted by John Cocktosin | Report as abusive