Taxes Blog

Finance Blogs » Taxes » IRS accused of amnesty tricks

IRS accused of amnesty tricks

By Kay Bell · Bankrate.com
Thursday, May 6, 2010
Posted: 2 pm ET

State tax amnesties, such as the Pennsylvania one with the scary ad that I mentioned earlier this week, get a lot of attention.

But the feds have their own version of amnesty for individuals who try to hide money from the IRS in offshore (meaning any place but the United States) accounts.

Swiss bank accounts, most notably those held in the Alpine nation's national bank UBS, got the most attention. Last year, the IRS widely publicized the amnesty -- it calls it voluntary disclosure, a program that's still in effect for certain situations -- for all offshore account holders.

As with state amnesties, the IRS program allows taxpayers who haven't reported all their income to do so and avoid, in the IRS's words, "substantial civil penalties and generally eliminate the risk of criminal prosecution."

So lots of folks took the IRS up on the program.

Now, however, some say the tax man reneged on his offer.

Thirty-two lawyers, many of whom are former high-ranking government tax officials now in private practice, sent the IRS and Department of Justice a letter saying that the agency's subsequent decisions to criminally prosecute some taxpayers who came forward and paid their taxes is akin to bait-and-switch and could jeopardize the entire voluntary disclosure program.

The attorneys concede that the program is "an act of administrative grace" by the IRS. However, they argue that "prosecuting persons who came forward in good faith during the fast moving events of late 2008 through mid-2009 would smack of trickery, like playing 'gotcha.'"

The Justice Department declined to comment, but Deputy IRS Commissioner Steven Miller told the Wall Street Journal that "the Service has been clear and consistent. We said that people already known to us were not good candidates. We accepted over 97 percent of those who came forward and are willing to talk to attorneys who have issues with the way their clients were treated."

I think the attorneys have a point. When a person goes into a situation under one set of rules, they should remain in effect for the duration.

What do you think? Are the IRS and the Justice Department doing the right thing by getting the money and then putting the confessing taxpayers in jail?

«
»
Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
1 Comment
TiredofGovermentBS
May 07, 2010 at 3:22 pm

This is exactly why people that are in tax trouble, stay in tax trouble. All these quirky rules to follow a law that really isnt a law. I dare anyone one of you reading this to find me an official law that states paying federal taxes is required by law. Google it, it isnt there, we as sheeps, just follow what is deemed as being "Good american behavior". Wake up sheeps...