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NPR Talks to Scott Michel About Implications of Wegelin Guilty Plea

January 8, 2013

Caplin & Drysdale's President Scott D. Michel is quoted extensively by NPR concerning the recent guilty plea of Swiss bank Wegelin and the implications for Americans with assets outside the U.S.  Please go to NPR's website to view the full article.

Excerpt taken from the article.

In 2010, Congress passed the Foreign Account Tax Compliance Act, or FATCA, that calls for overseas banks to begin full disclosure of U.S. account holders beginning next year. All along, Washington has been pursuing new bilateral treaties to share tax information.

Meanwhile, the IRS has been encouraging U.S. citizens with undisclosed offshore accounts to come forward, a process known as "voluntary disclosure." It's not exactly an amnesty, but the IRS can waive steep penalties that would be levied on top of any back taxes owed, says Scott Michel, an attorney who has represented clients going through voluntary disclosure.

He stresses that not all undisclosed offshore accounts are tied to someone who is a tax evader. The account users range from people who are diverting money intentionally to those who simply discover an undisclosed account as part of an inheritance, says Michel of the Washington, D.C.-based law firm Caplin & Drysdale.

In any case, it's clear that in the past several years, especially since the start of the Obama administration, that "the tax division of the Justice Department and the IRS are clearly focused on the offshore area," Michel says.

First UBS and now Wegelin have given them plenty to work with. "The government here is a little bit like a cat pulling on a ball of yarn — they keep on unraveling evidence that leads them in different directions," he says.

With FATCA, it's going to get a lot harder for anyone who chooses to forgo the voluntary disclosure route, he says, because U.S. banks will be reluctant to deal with any foreign bank that doesn't comply with new disclosure rules.

"Every bank anywhere in the world, for the most part, is going to have to start providing the IRS with information about Americans who have accounts at those financial institutions," Michel says.

FATCA puts banks in the role of policeman, forcing Americans with money overseas to comply, he says.


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