Amnesty for Tax Cheats

By Hootsbuddy

Make a mental note, readers. This word "amnesty" will appear in the headlines again, opening soon at a theatre near you. It won't be called by any of the other euphemisms now accorded those whose Swiss bank accounts are part of an accounting scheme to avoid paying taxes to the IRS. Instead it will be hurled with righteous indignation and contempt in the direction of undocumented immigrants. More on this at a later date. Now to the main attraction.

It's old news now because this story has been out for a few days. But before it slips out of sight I want to note an obscure bit easily missed if you just scan headlines like I often do. First, the story.

Thousands of Americans who thought they had a secret Swiss bank account will have their names and account details given to the U.S. Internal Revenue Services under an agreement announced Wednesday among U.S. and Swiss authorities and the Swiss bank UBS.

The IRS said Americans would no longer be able to evade taxes so easily by hiding their assets in offshore accounts.

The agreement comes as U.S. tax authorities conduct a criminal investigation into Americans who used Swiss bank accounts at UBS AG /quotes/comstock/13*!ubs/quotes/nls/ubs (UBS 17.51, +0.58, +3.43%) /quotes/comstock/06p!ubsn (CH:UBSN 17.50, +0.76, +4.54%) to avoid paying U.S. taxes.

The settlement follows demands from the U.S. authorities that the bank hand over details on more than 50,000 customers. According to the settlement, U.S. tax authorities will gain access to 4,450 accounts of Americans who have accounts with UBS, and will drop a lawsuit against UBS in federal court demanding the names.

However, the agency expects to have access to hundreds of additional accounts through other agreements. An IRS official said the total number of names disclosed could be in the "high 5,000s."

"Wealthy Americans who have hidden their money offshore will find themselves in a jam," said IRS Commissioner Douglas Shulman. "You can expect us to continue to be aggressive with institutions that are helping Americans avoid taxes."

That's the fun part. For a some readers this was an Oh shit! moment, but for most the reaction ranged from So?? to Sic 'em! 
(I called my tax accountant to see if I was on the list and he assured me that my off-shore hidden assets were safely stashed in dozens of other locations but none were in Switzerland. As long as they don't mess with Dubai I feel safe.  After breathing a sigh of relief I forgot about it and moved on to something else. Riiight!)

The Wonk Room today points to a very different reaction to this story from CNBC's Michelle Caruso-Cabrera.

"This is a terrible terrible thing that has happened today. You may think this is about rich tax cheats, but no matter what your income is, your taxes are lower because of tax havens and they help prevent tyranny by corrupt governments."

Huh? Did I get that right? Sure enough that's what she said and they have a thirty-second snip as evidence. I've grown accustomed to crazy thinking during the Blue Dog Days of August so I paid little attention, but while looking for whatever twisted logic lay behind this astonishing conclusion, I noticed the use of the word "amnesty" toward the end of an article. 

The amnesty scheme

The erring account holders will be given a deadline of Sept. 23 to come forward and voluntarily disclose the quantum of tax evasion. Such a disclosure will condone some of the penalties to be imposed on them.

The agreement is likely to provide the much needed shake up to the tax evaders. The U.S. tax watchdog is expecting that a lot more tax evaders would come forward, avail of the amnesty program and escape criminal prosecution.

The word jumped off the monitor at me. The word got my attention more than the report. The only time I recall seeing it more than once in a story is in angry screeds hostile to immigrants in any form, tossed into a sarcastic stream of vitriol aimed at discrediting anyone suggesting an accommodation with several million undocumented immigrants who are as essential to the US economy as oil to an internal combustion engine. 

Two comments.

First, it's a smart move on the part of authorities to give tax cheats a window of opportunity to come clean, perhaps doing a little whistle-blowing along the way.

Second, this is not about garden variety cheating. This is not telling the IRS you donated $476 to Goodwill when those boxes of old junk wouldn't bring thirty dollars at a yard sale. This is big-time tax evasion by people who never seem to have enough. 

Ron Beasley and I have both posted about how the rich get richer as the income gap between rich and poor grows wider by the decade. The numbers are not hard to discover.  This story is part of that profile, not in a good way.

The president has quietly but clearly said repeatedly that these are the people in the best position to help pay the costs of health and insurance reform and he is correct. This is why I'm putting up this post. The reform issue is partly about doctors and medicine, but it is mostly about money, both taxes and corporate profits.

I should note before closing the various delicate ways some writers avoid using that nasty "A" word.

• the catalyst for them to move forward


• 90 days to �ensure that the IRS voluntary disclosure program runs smoothly,�


• voluntary disclosure program


• �The noose is tightening faster than they ever imagined.� (I really like that one.)


• immense pressure on someone to go through the IRS voluntary disclosure program

Anything, it seems, to avoid the "A" word. For the record, though, a search for "amnesty UBS" returns over a million and a half hits. Remember that when the immigration debate comes around again and notice how pejoratively the word "amnesty" will be used.