Taxation & Estate Planning

Playing Russian Roulette

By Darrin Mish

The IRS UBS dispute is over. The dispute was resolved when UBS agreed to disclose an unspecified number of names of their American account holders to the IRS who are suspected of tax evasion. The number is estimated to be about 52,000 Americans. If you are one of the UBS bank account holders, you would know whether you are one of those concerned or not.

The decision now is whether to confess to the IRS that you have been evading taxes through your Swiss UBS bank account. The IRS is having a Voluntary Disclosure program that runs until September 23rd. Under this program, if you voluntarily confess to your misdeeds, you might be charged a reduced penalty in taxes. But if you don't fess up and the IRS investigates you based upon your details in UBS bank, you are in for trouble. You will likely face stiffer penalties and criminal charges.

In a previous disclosure of 250 names by UBS, three individuals have owned up to tax evasion. Investigations are ongoing into the rest of the names. But since the IRS has the funds to prosecute about 1,000 criminal tax cases per year, you might like to take your chances at playing a Russian roulette cat and mouse game with the IRS. You might get away scot free (at least for this year) if you wait till after September 23rd and the IRS has not investigated you, indicating that your name might not be one of those that UBS has turned over to them. But even if you do not hear from the IRS by September 23rd, it does not mean they do not have your name. If they do have your name, it will just be a matter of time before they come calling for you.

Lawyers who have talked to individuals about whether they would turn themselves in found that only about one in five said they would do so by September 23rd. But even if you do, don't expect the penalty to be lenient. You will probably end up paying at least 40% of the total value of your bank account not including $20,000 to $50,000 in legal fees depending on how complicated your case is. Furthermore, coming forward does not mean that the IRS will automatically accept your application to pay your taxes. Since you have not been paying your taxes promptly every year, the advantage is with the IRS and they can choose whether they wish to accept your application or not. If your name is on the list provided by UBS, your application might be rejected. The only way for you to be accepted is that you apply for the amnesty before they get your name.

So it's time to come clean and not play Russian roulette with the IRS. You could lose more than just a few dollars.Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for almost two decades. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 1-888-GET-MISH.

Full post as published by IRS Problem Solver Blog on September 10, 2009 (boomark / email).