UBS Case Leads To Offshore Info Volunteers

July 31, 2009 International Tax CooperationOffshore BankingTaxation in USA  No comments

The ongoing legal action between UBS and US Government has lead to some US offshore account holders volunteering their financial information to eschew possible harsher penalties.

According to Internal Revenue Service (IRS) spokesman, Terry Lemons, almost 400 applications were received by the IRS for the Leniency Program for offshore bank account disclosure in the week starting Monday 20th of July. This amount eclipses the voluntary disclosures for 2008, which numbered only 100 individuals.

The IRS is currently pursuing the identities of approximately 52,000 individuals who they believe to hold offshore bank accounts with UBS specifically for tax evasion purposes. The legal action is proceeding in the US court system, thereby circumventing the strict Swiss banking privacy laws.

Those individuals who volunteer will face a penalty of 5% to 20% of the asset’s value held with UBS. The asset will be evaluated at its peak value throughout the last six years. The exact penalty figure will be judged by the IRS, but it was stated that in some specifically mentioned cases the penalties will be on the lower end of the spectrum.

In contrast, IRS standard procedure in similar circumstances mandates either 50% or $100,000 of the asset’s value confiscated, depending on which is higher. Furthermore, in the case of over three years of non-compliance the IRS can demand 150% of the asset value as penalty.

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