IRS Gains Access to Secret Account Data

I am very happy to announce the latest in our series of guest blawger posts. Today, Joseph Lavoie Jr. takes a look at recent IRS efforts to crack down on foreign bank-facilitated tax evasion, as many wealthy Americans have historically used Swiss banks to skip their annual April 15th bill. Joe focuses on the positive effects of these recent efforts. Though the banks claim that this could have a chilling effect on investor behavior, I think that on the whole it is a positive development. Joe manages to get in a plug for tax law classes as well.

Yesterday, Bloomberg reported that nearly 15,000 voluntary disclosures of tax evasion have been brought to light through an IRS partial amnesty program. This announcement comes in the wake of this summer’s agreement between the U.S. and Swiss governments for the release of data to the U.S. on up to 4,450 UBS accounts. Although the U.S. intially requested information on up to 52,000 accounts, this will still be impactful as the files the IRS will receive includes those accounts with over 1 million Swiss francs (~ $985,000) and which were already under suspicion of tax fraud or similar crimes.

While the U.S. is looking at billions of dollars returning to the country through this investigation, the real payoff will be the dis-incentivizing effect on wealthy individuals, who will refrain from hiding money oversees for the foreseeable future. Senators such as Carl Levin (D-MI) and Max Baucus (D-MT) and Representative Charles Rangel (D-NY) are outspokenly against the veil of secrecy employed by foreign banks, despite firms such as Credit Suisse group AG claiming that this approach could hurt foreign investment in the U.S.

While the additional tax revenues and future impacts are positive for the Treasury, perhaps the best part is the 800 jobs that the IRS plans to create in the next year to staff eight overseas offices. For all of the law students reading, this could be good news, as they’re bound to need some folks with Tax Law expertise. Applicants should brush up on their Mandarin and Spanish, as Beijing and Panama City are just a few of the offices the IRS is looking to staff. Those potential applicants who don't speak a foreign language can head to the land down under and find work at the Sydney office. However, when you start raking in the big bucks, just remember what William Sharp, of Sharp Kemm PA, has to say ‘…the days of bank secrecy are over.’