47,000 wealthy American tax cheats, just at UBS

UBS was caught helping 47,000 rich Americans cheat their fellow taxpayers out of billions of dollars in taxes:

UBS AG now says it had about 47,000 accounts held by Americans who didn’t pay U.S. taxes on their assets, but Switzerland’s biggest bank is providing the names of only 300 American clients to the U.S. government.

The IRS has offered rich tax cheats very light penalties if they turn themselves in. Well, even though the IRS is offering to let these tax cheats off with a mere wrist slap, many wealthy tax cheats still seem unable to decide what to do:

Lawyers say they have been flooded by frantic calls from wealthy clients wondering whether to turn themselves in — and, if so, how. “One woman was very scared. She was in tears,” says Bryan Skarlatos, a lawyer at Kostelanetz & Fink in New York and chairman of the American Bar Association tax section’s committee on civil and criminal tax penalties. On the ride back to New York from a tax conference in Galloway, N.J., last Friday, Mr. Skarlatos received four calls from worried clients. Some people have “many millions of dollars” stashed abroad, he says, and “are having a hard time deciding” what to do about the IRS program, which he describes as “the classic carrot-and-stick approach.”

There are two scandals here: 1) Letting tens of thousands of wealthy tax cheats escape almost without penalty; and, 2) That wealthy tax cheats still can’t bring themselves to do the legal and honorable thing, even when faced with a real threat of being caught and prosecuted.

Posted by James on Thursday, April 09, 2009