October 13, 2009

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How patriotic of these wealthy Americans, to hide their money offshore so it was available when their country finally needed it.

Not only did they get the tax code and every law slanted in their favor over the past 30 years, they've also earned more than ever. And yet, they still feel compelled to steal even more. What's wrong with these people?

Many Americans dread April 15, the deadline for filing their income tax returns. But some well-heeled people are trembling over another looming tax day: Oct. 15.

Thursday is the deadline for Americans to come clean about the money they have hidden offshore, in places like Swiss bank accounts. No one can say with certainty how much money is out there — the accounts are secret — but the hoard may be tens of billions of dollars.

Several thousand wealthy people have come forward, hoping to avoid large fines or possibly even prison. But many others are still weighing their options. The choice is stark: They can confess and pay the penalties, or gamble that they will not get caught. With the deadline only days away, tax lawyers say they are being inundated by anxious clients.

“We’re seeing a flood of people,” said Scott D. Michel, a tax lawyer in Washington. His firm, Caplin & Drysdale, has 350 clients who are preparing to report their offshore accounts to the Internal Revenue Service. The firm has 14 lawyers handling their cases, one of which involves a tax bill of hundreds of millions of dollars.

The deadline is part of a broad crackdown on Americans who use offshore accounts to evade federal taxes. As part of the effort, United States authorities have challenged the long tradition of banking secrecy in Switzerland, and, in particular at UBS, that nation’s largest bank.

The I.R.S. is offering tax dodgers some leniency. Penalties will be reduced for people who come forward by Oct. 15. They will be assessed fines equal to 5 to 20 percent of their tax bills, rather than the usual 50 percent. They also will pay that penalty once, based on the highest balance in their offshore accounts over the last six years, rather than for each of those six years.

At least 4,000 clients of UBS and other private banks have come forward in recent months, a government official who had been briefed on the matter said.

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