Editorial: Crackdown on offshore tax cheaters is paying dividends

[applegrove]

Editorial: Crackdown on offshore tax cheaters is paying dividends

http://www.chicagotribune.com/news/opinion/editorials/ct-edit-offshore-20131001,0,5704071.story

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This crackdown has the potential to pay big dividends. A U.S. Senate report estimates that secret offshore accounts used to evade taxes cost the Treasury at least $100 billion a year. Factor in the steep financial penalties assessed against cheaters, and the U.S. could bring in significant revenues. Amnesty programs enabling Americans to declare their offshore holdings have attracted nearly 40,000 participants and generated $5.5 billion in back taxes and civil penalties. Removing tax havens also will promote respect for the law and improve voluntary compliance with the tax code.

These welcome developments stem from a 2006 overhaul of a government program aimed at rewarding whistle-blowers who turn in tax cheats. Bradley Birkenfeld, an American banker, led Internal Revenue Service agents to his former employer: Swiss giant UBS AG. In 2009, UBS admitted that it aided U.S. tax evasion, paid a $780 million settlement and handed over data on 4,500 suspicious accounts. Birkenfeld received a whistle-blower payment of $104 million.

After the UBS case made clear how high the stakes were, the U.S. played hardball. One of the world's oldest banks, Wegelin & Co. of Switzerland, shut down last year after pleading guilty to tax-evasion charges. More than a dozen Swiss banks and financial firms are under U.S. criminal investigation.

The Swiss tradition of hush-hush banking is going by the boards: An agreement in August between the U.S. and Switzerland will allow other Swiss banks to avoid criminal prosecution in the U.S. only if they disclose extensive information about their American clients, including those who fled Switzerland for other tax havens after the UBS case broke.


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