Miami Tax Evasion Criminal Defense Attorney on the Fallout From the IRS Lawsuit Against UBS

February 23, 2009 by David S. Seltzer

The U.S. Internal Revenue Service made big financial news last week when it sued Swiss banking giant UBS AG for allegedly helping 52,000 Americans avoid paying taxes on their foreign accounts. The lawsuit alleges that UBS must show good reasons for not complying with a 2008 court ruling requiring it to turn over information on tens of thousands of Americans’ accounts, which hold nearly $15 billion in assets, according to the Associated Press.

The claim came one day after the Justice Department agreed to defer prosecution of UBS for intentionally and explicitly helping U.S. clients evade taxes, which the bank has acknowledged and an informant formerly employed by UBS may have confirmed. UBS argues that turning over the information would violate Swiss law, although it has already agreed with the Justice Department to turn over a shorter list of clients and pay a fine in exchange for deferred prosecution of the bank itself.

In response, USA Today reported Feb. 19, criminal tax evasion defense attorneys in South Florida and elsewhere are seeing a rush of new clients. According to the article, these clients hope that voluntarily disclosing their foreign bank accounts will help them avoid criminal prosecution for tax evasion. The IRS voluntary disclosure program allows taxpayers to confess and pay the back taxes and steep penalties for failure to report those assets. Without that disclosure, those who are caught face up to five years in federal prison for each count of felony tax evasion.

A tax lawyer interviewed by USA Today told the newspaper that while some of his clients intentionally banked their money overseas to avoid taxes, others simply didn’t realize that they owed taxes. That’s an important distinction, because the federal criminal tax evasion statute requires that attempts to avoid taxes must be “willful.” People who made honest mistakes should not be eligible for prison time -- but they still may need the help of an experienced criminal defense attorney to prove their innocence. As a Miami tax evasion criminal defense lawyer myself, I also help clients negotiate a fair and affordable settlement of back taxes and penalties with the agency.

The U.S. tax code is so notoriously complex that it’s a frequent issue for presidential candidates. Given all of the recent Cabinet nominees with taxation problems, it seems quite realistic that some of the UBS accountholders did not realize that they were failing to pay legitimate taxes. That might be especially true if the bank failed to send them the tax documents that U.S. banks issue every January. No doubt some of these accountholders knew they were evading taxes, but as a Fort Lauderdale tax evasion criminal defense attorney, I hope the disclosures from the IRS lawsuit won’t end up sending people to federal prison for a mistake made in good faith.