Part 2: Tax Evasion - The United States and the UBS Affair
Following-up on our previous post, Part 1: Tax Evasion - The United States and the UBS Affair, regarding the U.S.'s efforts to gather information from UBS about American account holders who may have been hiding assets and evading US taxes, the Internal Revenue Service (IRS) last week indicated that it is setting up an elite division to handle audits of wealthy Americans suspected of offshore tax evasion.
The newly created office will be within its Large and Mid-Size Business division, indicating the IRS wishes to have the audits handled by those with experience in dealing with tax treaties and cross-border business structures. As Jack Townsend of "Federal Tax Crime" notes in his post, Get in Line Brother #25 - IRS Plans for Life After Voluntary Disclosure, this should encourage those who may have US information reporting requirements to seek advice and consider a voluntary disclosure to the IRS. The IRS's voluntary disclosure program for reporting previously unreported offshore accounts ends September 23, 2009.
And in news closer to home, a spokeswoman for the CRA announced last week that Canadian government officials are pressing UBS for details of Canadian account holders. As we mentioned in the part one post, reportedly there is evidence that UBS ran a "Canada Desk" that may have been conducting similarly fraudulent activities for Canadians, and at one point may have managed approximately $5.6 billion in assets.
Although it appears that Canada's efforts at this point are limited to meeting with UBS, Canada may follow the US's footsteps and seek a court order requiring disclosure of account information.
As previously mentioned, Canadian taxpayers who may be affected by a crack-down would be wise to consider a voluntary disclosure to the CRA and seek legal advice.
