UNITED STATES OF AMERICA




  •         The NEW YORK TIMES reported on Friday, February 20, 2009 that the U.S. Justice Department had initiated a court action seeking to force UBS CORP., which is based in Switzerland, to reveal the identities of 52,000 Americans who the government believes are using secret offshore accounts at the bank to avoid paying U.S. taxes. This was an unepeted move by the U.S. government against the company just a day after UBS had agreed to pay the government US$780 million in settlement of charges against it alleging that the company had defrauded the U.S. Internal Revenue Service; it was also a strong move against Switzerland's long tradition of banking secrecy. Prior to this court filing, it was believed that American authorities suspected far fewer citizens to be engaging in such activities, and the filing raised new questions about the amount of such business conducted by the bank, and about just how many Americans  were involved. In the beginning stages of their invesigation Federal authorities had concentrated upon 19,000 secret acconts, of which UBS had provided about just 250 account-holders' names.  (SOURCE:  Report, "A 2nd Inquiry Hits UBS, Pressed for 52,000 Names" by Lynnley Browning, in New York Times Business day section, Friday, February 20, 2009,page B1).



  •     According to a report that appeared in the NEW YORK TIMES on March 30, 2005, the United States Internal Revenue Service said on March 29, 2005 that the gap between what all taxpayers owed in taxes in 2001 and what they actually paid was in the range of US$312 billion to US$353 billion. The TIMES said the the government's report did not explain the reason why it cited a broad range of figures rather than giving one definite amount. The TIMES also said that this was the IRS' "first large study on the issue [of tax avoidance] since 1988."

        The study said, according to the TIMES, that the government was able to recover some of the outstanding liabilities by using enforcement and other measures. The amount so recaptured, according to the report, came to US$55 billion, leaving a final outstanding tally of still-uncollected taxes of US$257 billion to US$298 billion. The IRS said that this final outstanding amount was greater than the amount that the government had spent on the entire Medicare program in 2001, but much less than the US$430 billion that was spent by the government that year on the Social Security program;  that amount was US$430 billion.

        According to the NEW YORK TIMES in this report, "Figures fior other years are not directly comparable, given changes in tax regulations and inflation, but government figures put the estimated gross tax gap at $95 billion for 1992 and $80 billion for 1988."

        The IRS report said that 80% of taxes owed but not paid by individuals were a result of underreporting of income, often by people working in the service sector. The remaining 20%  was said to be due to the deliberate actions of some people in not filing any tax returns at all, or to the refusal of some people to actually pay any of the taxes due on the returns that they do file.  (SOURCE:  Report, I.R.S. Estimates '01 Unpaid Tax Could Be as High as $353 Billion, by Lynnley Browning in NEW YORK TIMES Wednesday, March 30, 2005, Busines Section, pg.  C4   N).

  •     On October 22, 2004 President George W. Bush signed into law the American Jobs Creation Act of 2004. Title VIII of this Act, the "Revenue Provisions" Title, contains several provisions relating to use of "tax shelters" by individuals and corporations, such as "expatriating" corporate income to a foreign corporation, or the non-reporting of certain income which would otherwise be subject to taxation. This Act also creates a new penalty for any person who fails to include with any return or statement any required information with respect to a reportable transaction. It also says that this new penalty shall apply regardless of whether or not the ransaction in question results in an understatement of tax due, and that it also applies to any penalty which may be imposed for reasons related to the accuracy of submitted returns. This penalty rate shall be US$ 10,000.00 for a natural person, or US$ 50,000.00 in any other case. This penalty is increased to US$ 100,000.00 for individuals and to US$ 200,000.00 for other cases, if the failure to include required information pertains to a "listed transaction", which is defined as a transaction which is the same as, or which is substantially similar to, one which   has been specifically identified by the  Secretary of the Treasury as a tax-avoidance transaction.  (SOURCE:  See Library of Congress "Thomas" website here:).

  •     On Saturday, August 17, 2002 the NEW YORK TIMES reported that the United States Treasury Department had issued a ruling on August 16 of this year which banned a tax-avoidance technique involving life insurance policies which has been used by "thousands of the wealthiest Americans escape paying billions of dollars in gift and estate taxes." The article explained that the technique involved the purchase of expensive policies which would pass on the large proceeds to the person's heirs, but also involved the declaration of a far lower price for the policy on gift-tax returns. The Treasury Derpartment said on the 16th that this procedure was invalid, and never had been legal. It is now expected that people who have used these policies to avoid high taxation will be drawn into "years of  litigation with the government and with their advisers.  (SOURCE:  Article, Treasury to Ban Technique Used to Reduce Tax Bill  in Business Digest column, Business Day section, in NEW YORK TIMES, Saturday, August 17, 2002, pg. C1 L+). 





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