IRS Tax Amnesty Yields Unprecedented Response From Tax Cheats

The IRS says that billions of dollars are coming into the U.S. treasury from the amnesty program, which is aimed at cracking down on offshore tax cheats, as more than 14,700 U.S. taxpayers with offshore accounts in 70 foreign countries have come forward to settle their tax debts.

Participation in the IRS’ amnesty program was “unprecedented” and the final number was nearly double the agency’s estimate in October, U.S. IRS Commissioner Douglas Shulman told reporters on a conference call in Washington today.

The limited-time voluntary disclosure program allowed people to keep their identities secret and avoid criminal prosecution if they agreed to pay taxes, interest and penalties. “These voluntary disclosures, while extremely significant, are but one more step in the IRS and the Department’s efforts to hold those U.S. taxpayers who have undisclosed foreign accounts responsible for their actions,” the U.S. DOJ said in a press release Tuesday.

Americans with undeclared offshore accounts have been under growing pressure since Switzerland’s largest bank, UBS AG (UBS),  agreed Aug. 19  to hand over details on more than 4,450 American clients suspected by the IRS of using Swiss accounts for tax evasion. As part of the agreement, which could change the Swiss banking industry’s culture of secrecy, UBS agreed to provide the U.S. with the identities of, and account information for a number of U.S. UBS customers and paid $780 million in fines, penalties, interest, and restitution. The 4,450 accounts at UBS held over $18 billion at one point.

Under the IRS’s amnesty program, the tax agency will collect 20% of a disclosed account’s assets based on its peak value in the previous 72 months. In cases of inactive accounts, the agency will confiscate as little as 5%.

The more than 14,700 voluntary disclosures announced today are nearly double the amount the IRS reported a month ago.