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UBS deal sends wrong message

August 21, 2009

Three American University law professors say that some terms of the UBS bank accounts deal make it look like America's tax laws are not enforced uniformly.

Nancy Abramowitz, Andrew Pike and Robin Westbrook, professor's at the D.C. university's  Washington College of Law, are particularly concerned about the possibility that some of the wealthy suspected tax evaders could get amnesty after their names are turned over by the Swiss to U.S. tax investigators.

In a letter to IRS Commissioner Douglas Shulman (text reproduced at Tax.com), the professors tell Shulman that:

"In the last few years, we have seen an increase in the assertion of
penalties against the poorest, least sophisticated taxpayers with
virtually negligible room for negotiation by the IRS. It would seem
that a blanket program of offering reduced penalties and no criminal
action to wealthy, sophisticated tax dodgers who come forward on the
eve of their names being turned over to the IRS and with prior
knowledge of the forthcoming disclosure, is suggestive of something
less than even handed tax administration."

Some IRS help for poorer taxpayers: The professors know of what they speak. In 1997, Professor Janet Spragens, Director of the Federal Tax Clinic at American University's Washington College of Law, appeared before the National Commission on Restructuring the Internal Revenue Service and advocated for federal funding of low income taxpayer clinics. Her proposal was adopted by the Commission as one of its recommendations for a fairer and modernized IRS.

The resultant Low Income Taxpayer Clinic (LITC) program now is a resource for people who generally cannot afford to hire professional tax help when they encounter problems after they've filed. Schools and nonprofit groups step in with the clinics, which provide low-cost, and
in some cases free, help. They are staffed primarily by volunteers who
can represent low-income
taxpayers in their IRS audit, appeals and collection issues.

As Spragens advocated, the LITCs are supported in part by financial help
from the IRS through its National Taxpayer Advocate office. Each year,
the office seeks applicants and selected clinics can receive up to $100,000 in matching federal grants.

Eligibility for LITC services is based on poverty guidelines set by the Department of Health and Human Services. They are adjusted annually for inflation. The 2009 annual income limits range from $27,075 for an individual to $64,475 for a family of five. For larger families, an additional $9,350 per person in earnings is allowed.

If you qualify, you can find the nearest LITC using the IRS locator map or in IRS Publication 4134.

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TAX-SAVVY WAYS 
TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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