IRS Gives Wealthy Tax Evaders One Last Chance to Reveal Offshore Accounts

Amidst all the chatter over the hefty cost of healthcare reform, the true pocket-drainer on the U.S. economy is stepping into the light. In fact, according to a 2008 Senate report, tax evasion costs the U.S. $100 billion a year in tax revenue.

Wealthy Americans have found secret hideaways for their money in offshore accounts in Hong Kong, Switzerland, and the Cayman Islands, just to name a few. Now the U.S government is extending a program for six more months that offers these shifty characters an opportunity to come forward with the truth. Consequently, if they do so, they face less severe penalties, including no criminal prosecution and lower civil penalties. So far, more than 3,000 have applied—most of which were clients of UBS, the largest Swiss bank and first target for the U.S. crackdown. In February, UBS agreed to pay a $780 million criminal settlement to the IRS after it was charged with having Swiss bankers pose as tourists in the U.S. to help wealthy Americans set up offshore accounts. Soon after, UBS agreed to settle a civil lawsuit in August by providing the IRS with data from nearly 4,500 American clients whose accounts held almost $18 million combined.

So why do wealthy Americans choose to keep offshore accounts? Simply stated, they are able to find tax deductions that you would never find on an IRS tax form: no U.S. taxes on their money. This year alone, the IRS has criminally charged five wealthy men including a representative for Asian toy manufacturers, a yacht broker, a retired Boeing aircraft sales manager, and the owner of a New Jersey building supply firm. However, the most prominent figure the IRS nabbed this year was Russian-born billionaire Igor Olenicoff, owner of Olen properties. Olenicoff owns thousands of residential and commercial units through Olen properties, and owes an estimated $44 million in unpaid taxes. All five men held accounts at UBS and have either pled guilty to the charges or have plans to do so.