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August 21, 2009

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Tax dodger 'flood' expected in US

AN agreement by a major Swiss bank to disclose the identities of thousands of Americans suspected of hiding assets has US tax advisers bracing for a stampede of wealthy tax dodgers looking to come clean.

The United States and Switzerland finalized an agreement on Wednesday in which the Internal Revenue Service will receive details on 4,450 UBS AG accounts suspected of holding undeclared assets of American customers.

The agreement pierces Switzerland's famed tradition of banking secrecy and is expected to prod thousands more UBS clients in America to voluntarily disclose their financial details to the IRS, lest they be pursued later.

"What this does is creates an overwhelming incentive for virtually every one of those account holders to come forward," said Peter Zeidenberg, a litigation partner at the law firm DLA Piper in Washington.

"If there had been a steady stream, there is now going to be an absolute flood," he said.

The agreement is part of the Obama administration's stepped-up efforts to go after wealthy tax dodgers hiding assets in offshore accounts, an initiative that promises to yield many more prosecutions, IRS Commissioner Doug Shulman said.

UBS has an estimated 52,000 accounts held by US customers. The IRS chief said the 4,450 accounts being identified were the ones most suspected of containing undeclared assets. Many of the rest are held by people who have complied with the law and paid their taxes, Shulman said.

The IRS long has had a policy that certain tax evaders who 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.


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