DEAL WITH U.S. PUNCHES HOLES IN SWISS TAX HAVENS

IRS efforts to obtain names of suspected tax dodgers have many wealthy Americans nervous

A deal with Switzerland settling U.S. efforts to obtain the names of suspected tax dodgers from a Swiss bank has many wealthy Americans with offshore accounts nervously running to their tax advisers -- and the Internal Revenue Service.

"They are very frightened," said Richard Boggs, chief executive of Nationwide Tax Relief, a firm that specializes in clients with tax debts exceeding $100,000. "You have the super-rich who are not used to being pushed around, and they are finding themselves in unfamiliar territory."

The U.S. and Swiss governments announced a court settlement last week in efforts by the IRS to force Zurich-based UBS AG to turn over the names of some 52,000 Americans believed to be hiding nearly $15 billion in assets in secret accounts.

Justice Department and UBS lawyers told a federal judge that they had initialed a final deal. But they did not disclose any details, such as how many of the 52,000 names sought by the IRS will be revealed.

Even before the settlement, the high-profile case has scared hundreds of people to turn themselves in.

Peter Zeidenberg, a litigation partner at the law firm DLA Piper, said he is he seeing more people with undeclared assets seeking information about their legal options.

His advice: "I don't think you have much of a choice but to come forward. ... I think the landscape is permanently changed."

The IRS long has had a policy that certain tax evaders who earned their money legally and come forward before they are contacted by the agency usually can avoid jail time as long as they agree to pay back taxes, interest and hefty penalties.

In March, the IRS began an amnesty program that sweetened the offer with reduced penalties for those with undeclared assets. IRS Commissioner Doug Shulman said the response has been unprecedented.

Shulman wouldn't say how many people have applied. But the IRS said 400 people applied to voluntarily disclose undeclared assets in a single week in July, compared with fewer than 100 applications all last year.

The amnesty program, which ends Sept. 23, is part of a larger effort by federal authorities to crack down on international tax evaders.

The U.S. recently reached agreements with several countries, including Luxembourg and Switzerland, to share more tax information in the future, just as the IRS is strengthening its enforcement ranks.

Earlier this year, UBS admitted assisting U.S. citizens in evading taxes, as part of a deferred-prosecution agreement with the Justice Department. UBS agreed to disclose the names of about 300 American clients and pay a $780 million penalty. The IRS subsequently filed its case seeking the names of 52,000 additional U.S. taxpayers believed to be hiding assets in UBS accounts.