Nov 21, 2008 9:58 am US/Eastern
Web Exclusive: IRS Targets Holocaust Money
Attorney: Elderly Clients Trying To Clean Up Tax Records
Reporting
Lou Young
NEW YORK (CBS) ―
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It's estimated 6 million Jews were killed in the Holocaust. (File)
AP
The dam may be about to break on Swiss banking rules that have protected wealthy U.S. clients from IRS scrutiny and that is causing a panic among some relatives of Holocaust survivors and refugees who hid money in Switzerland before the outbreak of World War II.
Reports out of Zurich indicate the Swiss government has agreed to give the IRS information about some overseas accounts for people trying to avoid U.S. banking laws. The development stems from a U.S. Justice Department investigation of UBS' alleged courting of wealthy Americans for such offshore tax evasion. As the Justice Department expands its investigation to include other overseas banking entities, some owners of Holocaust-era accounts have sought legal help in "coming clean" with the IRS.
Scott Michel, an attorney with Caplin & Drysdale of Washington D.C., says he has "two dozen clients, some quite elderly," who are trying to clean up their tax records "before the names appear on some list."
The amounts in the accounts range from as little as $25,000 to complete hidden fortunes in the millions. Some of the clients are the children or grandchildren of people who fled the growing influence of Nazi Germany in the years leading up to WWII. Some are people who became aware of the accounts after the death of relative, others have known about them for many years and have "been paralyzed with fear" over how to handle the hidden fortunes.
"For these people," Michel explains, "voluntary disclosure now can help mitigate legal problems later. Some of the accounts have been untouched for many years, but some have had money deposited or withdrawn and that could lead to potential criminal penalties, as well as unpaid taxes, and fines.
"A lot of these people," he says, "inherited the situation from a relative or a spouse and frankly didn't know what to do. Now is a perfect time for them to take advantage of the IRS policy offering leniency for voluntary disclosure."
Among the 20,000 or so accounts currently being targeted by the IRS, it's estimated, perhaps a thousand or so involve Holocaust-era funds.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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