IRS Commissioner Doug Shulman on the agreement from UBS to turn over the names of 4,500 Americans holding Swiss bank accounts to avoid taxes.
In an interview that aired Wednesday on FOX Business Network, IRS Commissioner Doug Shulman comments that the IRS just blew a big hole in bank secrecy and that they are going after other institutions.
Transcript after the jump
Excerpts from the interview are below.
**MANDATORY CREDIT: FOX BUSINESS NETWORK**
On the IRS’s multifaceted attack on off-shore bank accounts:
“This blows a big hole in bank secrecy. As long as there’s been an income tax, we’ve had no access to secret bank accounts in Switzerland and because of our focused and concentrated efforts, we’re now changing that whole dynamic.”
On the IRS pursuing other institutions:
“A big part of our voluntary disclosure program is that, you come in, need to tell us what financial institutions you’ve been working with, what law firms, what other advisors you have helped to facilitate your tax evasion. Through that process, we’re getting a lot of leads and so you should expect us in the future to be pursuing other financial institutions, other intermediaries as well as lots of other taxpayers.”
On working with the Swiss Government:
“When we filed the lawsuit, the Swiss government’s position was that we couldn’t have access to any of these accounts and through us applying this pressure, the Swiss came around, decided to negotiate with us and is starting to open us bank secrecy.”
On the message the IRS wants to send:
“We’re sending a very strong message that if you hide your assets even out of this country. The IRS is going to pursue you, find you. The chances of you getting found has just gone up. It’s going to keep people on the right side of the law going forward.”
On the IRS’s goal to get people in the system:
“It’s been unprecedented the number of people that come in, the voluntary disclosure program’s only getting better. That’s my goal. Ultimately my goal is get people in the system and keep them in the system. So my message to people is that it’s a good time to get clean with the government. If you don’t there’s a better chance we’re going to find you than ever before.”
# # #
Transcript is below:
TOM SULLIVAN: WE’RE JOINED BY IRS COMMISSIONER DOUG SHULMAN. THANKS SO MUCH AND WHY NOW? GOSH, FROM THE TIME I WAS A CHILD, I HEARD ABOUT THESE SWISS BANK ACCOUNTS AND THEY WERE SECRET. WHY IS THE IRS DOING THIS NOW VERSUS WHY WERE YOU ABLE TO SUCCESSFULLY DO IT THIS TIME?
SHULMAN >> WELL, TOM, WE’VE DECLARED THAT GOING AFTER AMERICANS WHO ARE HIDING ASSETS OVERSEAS FOR THE PURPOSE OF EVADING TAXES IS A TOP PRIORITY OF THE IRS. SO WE’VE GOT A MULTIFACETED EFFORT WHICH INCLUDES CRIMINAL PROSECUTION, CIVIL PROSECUTION, MORE INVESTIGATIONS, FOLLOWING THE TRAIL LONGER.
THIS IS THE RESULT. WE HAVE AN UNPRECEDENTED ANNOUNCEMENT. WE’RE GOING TO GET THE NAMES BETWEEN TODAY’S ANNOUNCEMENT AND SOME OTHER PROSECUTION OF SOME 5,000 AMERICANS WHO HAVE BEEN HIDING ASSETS OVERSEAS IN SWITZERLAND. THIS BLOWS A BIG HOLE IN BANK SECRECY. AS LONG AS THERE’S BEEN AN INCOME TAX, WE’VE HAD NO ACCESS TO SECRET BANK ACCOUNTS IN SWITZERLAND AND BECAUSE OF OUR FOCUSSED AND CONCENTRATED EFFORTS, WE’RE NOW CHANGING THAT WHOLE DYNAMIC.
>> Tom: BUT WHAT WAS THE FOCUS? LIKE YOU SAID, WE’VE ALL HEARD ABOUT THESE SECRET BANK ACCOUNTS IN SWITZERLAND FOR DECADES, FOREVER. WHY NOW? WE KNOW WE’VE GOT A BIG DEFICIT. IS THAT THE REASON OR IS THERE MORE TO IT?
SHULMAN >> THIS IS WHEN I BECAME IRS COMMISSIONER ABOUT A YEAR AND A HALF AGO, I DECIDED THAT FOCUSING ON INTERNATIONAL TAX ISSUES WAS GOING TO BE A TOP PRIORITY. ONE ASPECT OF THAT IS A
FUNDAMENTAL ISSUE OF FAIRNESS WHICH IS IF A FIREMAN OR TEACHER PAYS ALL THEIR TAXES, WEALTHY INDIVIDUALS SHOULD NOT BE ABLE TO GO PARK ASSETS OVERSEAS AND AVOID PAYING THEIR TAXES. SO WE’VE BEEN DRIVING A WEDGE AND GOING AT THIS FROM A NUMBER OF ANGLES. THE SETTLEMENT THAT WE ANNOUNCED TODAY IS THE LARGEST ONE WHICH IS WE FOUND THAT UBS WAS FACILITATING TAX EVASION. WE FILED IN COURT A SUMMONS TO GET THAT INFORMATION. AT THE SAME TIME THE JUSTICE DEPARTMENT WENT AFTER UBS CRIMINALLY AND SETTLED WITH THEM. AND THIS IS THE CULMINATION OF OUR COURT PROCEEDING TO TURN OVER INFORMATION AND, YOU KNOW, FRANKLY I THINK WE FILED THIS LAWSUIT AT THE TIME WE FILED THE LAWSUIT, THE SWISS GOVERNMENT’S POSITION WAS THAT WE COULDN’T HAVE ACCESS TO ANY OF THESE ACCOUNTS AND THROUGH US APPLYING THIS PRESSURE, SWISS CAME AROUND, DECIDED TO NEGOTIATE WITH US AND IS STARTING TO OPEN UP BANK SECRECY.
>> Tom: ONE OF THE THINGS THAT THE IRS HAS ALWAYS BEEN CONCERNED ABOUT HAS BEEN COST BENEFIT. AND I KNOW THAT LIKE ANY BUSINESS, LIKE ANY GOVERNMENT AGENCY, YOU HAVE TO WEIGH THAT. IS THIS SETTLEMENT GOING TO BE A COST BENEFIT IN ITSELF, OR IS IT MORE SENDING A MESSAGE SO THAT PEOPLE DON’T DO THIS IN THE FUTURE AND YOU ACTUALLY COLLECT MORE TAXES DOWN THE ROAD?
>> I THINK IT’S BOTH. I MEAN, WE HAVE TWO JOBS. ONE IS IF SOMEONE DOESN’T PAY THEIR TAXES, WE HAVE A JOB TO FIND THEM AND MAKE SURE THEY PAY PENALTIES. WE’RE DOING THAT WITH THIS CASE BUT IT’S ALSO SENDING A VERY STRONG MESSAGE THAT IF YOU HIDE YOUR ASSETS EVEN OUT OF THIS COUNTRY, THE IRS IS GOING TO PURSUE YOU, FIND YOU. THE CHANCES OF YOU GETTING FOUND HAS JUST GONE UP. IT’S GOING TO KEEP PEOPLE ON THE RIGHT SIDE OF THE LAW GOING FORWARD. WE GOT 250 NAMES THROUGH A CRIMINAL PROSECUTION THAT WAS SETTLED IN JANUARY. FOUR OF THOSE PEOPLE ARE GOING TO JAIL. THROUGH THESE NAMES WE GOT HERE PEOPLE ARE GOING TO JAIL. THERE’S A LOT OF RISK TO NOT PAYING TAXES AND DOING SO IN A FRAUDULENT WAY.
>> Tom: THIS ALL CAME OUT FROM AN AMNESTY PROGRAM THAT YOU’RE RUNNING. WHAT’S THE STATUS OF THIS PROGRAM, HOW LONG DOES IT GO AND IS IT WORKING IN OTHER PARTS OF THE COUNTRY, THE WORLD, FOR EXAMPLE THE CAYMAN ISLANDS.
>> WE HAVE A CARROT AND STICK APPROACH. THE STICK IS US DOING PROSECUTION, MAKING SURE PEOPLE HAVE TO PAY HEFTY PENALTIES AND SOMETIMES GO TO JAIL. THE CARROT IS OUR VOLUNTARY DISCLOSURE PROGRAM. I’M VERY CLEAR THIS NOT AMNESTY. IF YOU WALK IN THROUGH THE PROGRAM, YOU PAY ALL THE TAXES YOU OWE. YOU PAY VERY HEFTY PENALTY, BUT YOU DO GET TO STAY OUT OF JAIL. AND SO MAYBE THERE’S THE AMNESTY PART OF IT IS — FROM A CRIMINAL SIDE, YOU DON’T GO TO JAIL. WE ANNOUNCED A SPECIAL PROGRAM ABOUT FIVE MONTHS AGO THAT ENDS ON THE 23rd OF SEPTEMBER THAT MAKES IT VERY PREDICTABLE WHAT ARE THE FINES YOU’RE GONNA PAY. AT THE SAME TIME WE’VE BEEN HAVING AGGRESSIVE PROSECUTIONS LIKE THE ONE WE SETTLED TODAY. IT’S BEEN UNPRECEDENTED THE NUMBER OF PEOPLE OF THAT COME IN, THE VOLUNTARY DISCLOSURE PROGRAM’S ONLY GETTING BETTER. THAT’S MY GOAL. ULTIMATELY MY GOAL IS GET PEOPLE IN THE SYSTEM AND KEEP THEM IN THE SYSTEM. SO MY MESSAGE TO PEOPLE IS THAT IT’S A GOOD TIME TO GET CLEAN WITH THE GOVERNMENT. IF YOU DON’T THERE’S A BETTER CHANCE WE’RE GOING TO FIND YOU THAN EVER BEFORE.
>> Tom: I SUSPECT PEOPLE ARE GOING TO RING THE PHONE SAYING HOW DO I GET INVOLVED. DO YOU HAVE OTHER BANKS IN SWITZERLAND THAT ARE ON YOUR RADAR SCREEN THAT YOU’RE TALKING TO AND/OR AGAINST THE CAYMAN ISLANDS.
SHULMAN >> A BIG PART OF OUR VOLUNTARY DISCLOSURE PROGRAM IS THAT, YOU COME IN, NEED TO TELL US WHAT FINANCIAL INSTITUTIONS YOU’VE BEEN WORKING WITH, WHAT LAW FIRMS, WHAT OTHER ADVISORS YOU HAVE TO FACILITATE YOUR TAX EVASION. THROUGH THAT PROCESS, WE’RE GETTING A LOT OF LEADS AND SO YOU SHOULD EXPECT US IN THE FUTURE TO BE PURSUING OTHER FINANCIAL INSTITUTIONS, OTHER INTERMEDIARIES AS WELL AS LOTS OF OTHER TAXPAYERS.
TOM >> THE OLD RULE WITH THE IRS IS IT’S BETTER TO KNOCK ON YOUR DOOR BEFORE YOU KNOCK ON OURS.
SHULMAN >> THAT’S RIGHT.
>> Tom: ALL RIGHT. IRS COMMISSIONER DOUG SHULMAN, THANK YOU FOR JOINING US FROM WASHINGTON TODAY.
SHULMAN >> THANKS FOR HAVING ME.
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