Further, the IRS is using the disclosed information to chase down other banks and law firms that may be holding out:
The disclosure program and the U.S. lawsuit settled by UBS are helping the U.S. crack down on offshore tax evasion by pursuing financial institutions and intermediaries including law firms, IRS Commissioner Doug Shulman said Aug. 19.This makes sense.
Advising US taxpayers not to declare their income, from whatever source derived, is a crime. See I.R.C. §§ 7201 et. seq. As a US Citizen or resident, you are subject to tax on your income earned anywhere in the world (This is today's TTT). Thus, if a law firm advises a US Citizen or resident not to report their offshore accounts (or any other income from anywhere in the world) on their annual 1040, both the law firm and the taxpayer face criminal liability.
And that is how they got UBS. UBS was advising clients not to report their Swiss accounts to the IRS. The IRS went after UBS on criminal charges of facilitating tax evasion (Aside: the Swiss distinguish between tax evasion and tax fraud). UBS has substantial assets and clients in the US and opted to cooperate rather than see its US operations shut down.
Now that disclosure has started, expect to see a lot more cooperation by foreign banks, tax attorneys, and high net-worth individuals when it comes to their future dealings with the IRS. Maybe, just maybe, the extra added revenue will reduce the inevitable future tax increases imposed on the rest of us.
UPDATE: The IRS has extended their disclosure deadline to October 15.