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As the deadline passes on a U.S. tax amnesty program that has lured thousands of wealthy Americans to declare offshore assets, attention now turns to prosecutions of those who kept their holdings hidden.
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The Internal Revenue Service's amnesty program, which ends at 5 p.m. EDT on Thursday, has seen 7,500 individuals come forward over six months, getting in before the IRS pursues them.
In exchange they get vastly lowered penalties and in most cases protection against criminal prosecution. For those who failed to turn themselves in, the Justice Department is pursuing criminal cases.
The U.S. government has already opened cases against about 150 clients of UBS AG, names it obtained when the Swiss bank paid $780 million to settle a criminal suit in February after admitting it helped Americans skirt the law.
In August, UBS [UBS
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] settled a related civil case by agreeing to turn over about 4,450 client names. Government officials say the issue is bigger than UBS and any one country.
"The IRS has new momentum in this entire area and in the coming months our efforts will only intensify," IRS Commissioner Doug Shulman said on Wednesday.
He added that the government will be "scouring" the amnesty forms for clues of other financial advisors who aided evaders. A top U.S. prosecutor recently said cases will be brought every few weeks. Private lawyers say the cases are crucial for deterrence.
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"The criminal tax prosecutor's job is to keep a handful of cases in the media so that everyone will see that there is at least that potential for being prosecuted," said Mark Matthews, a former IRS deputy commissioner for enforcement who now counsels private clients.
He said to keep the momentum going, the government will need to shift resources beyond UBS.
"This story has understandably focused on one financial institution and one country, but the truth is this was a global offer," for amnesty, Matthews said.
Indeed, IRS announced on Wednesday it was broadening its international presence, opening new offices in Beijing, Sydney and Panama City.
Clients of other banks have come in under the amnesty program, including those of UBS rival Credit Suisse [CS
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] and London-based HSBC, [HBC
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] lawyers said.
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"The IRS has done a very good job of scaring the hell out of everybody," said Ken Rubinstein, a lawyer with his own firm who counsel clients in tax matters.
He said he expects more prosecutions to keep the heat on offshore bank customers. The precedent set by the UBS case will allow the government to get more information from other countries and banks, he added.
Government officials have secured seven guilty pleas so far in the UBS case, including former clients, bankers and lawyers. Most were accused of hiding assets of less than $10 million.
Shulman, in announcing preliminary results of the amnesty program on Wednesday, would only say the asset sizes involved ranged from $10,000 to $100 million but would not characterize where the majority fit in that range.
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Private lawyers say most those coming in voluntarily are those who were ignorant of the law, and not the big fish intent on evading taxes that the government is after.
"This program has taken in a lot of people who stubbed their toe," said Josh Ungerman, an attorney at Meadows, Collier in Dallas.
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