Monday, September 21, 2009

Tax Cheats Get Extension

The IRS will extend the deadline to voluntarily come forward and admit that you've been hiding taxable assets from the US government. The extension was granted after a slew of accountants begged for more time to help clients get their filings together. More than 3,000 taxpayers have already come forward, compared with 88 for all of last year and 1,300 in 2003, the last time the IRS offered cheats a chance to come forward, admit their sins, and sleep better at night.

Apparently, it is not guilt that is making a hoard of tax evaders come forward just now. After the Swiss government settled with the US and agreed to identify at least 4,450 UBS account holders and possibly more from other banks, UBS sent a round of letters to account holders informing them that their information was about to be revealed. Some customers had hoped that they could escape scrutiny because their account was too small, but there appears to be no discernible pattern as to which customers were selected, with accountants claiming that several clients with "plain vanilla accounts well under $1 million have received these letters."

I find it interesting that so many folks chose to evade taxes during the Bush years. It seems hard to believe that the tax code in the US was ever going to be more friendly to capital than it was during the past eight years. 15% long term capital gains? 15% on dividends? Seriously, is it really that bad to suck it up and pay your 15% so you can have a police force and maybe some decent roads? Now your choices are to either confess and pay back taxes, penalties, attorney's fees, accounting fees and a special penalty that will work out to 40% to 60% of the account balance or face the very real prospect of criminal prosecution.