MIAMI (AP) — More than 14,700 U.S. taxpayers came forward to disclose billions in offshore bank accounts in 70 countries under a voluntary Internal Revenue Service program allowing most to avoid criminal prosecution as long as they pay what they owe, IRS officials said Tuesday.

A flood of people came forward in the last days before the amnesty program expired Oct. 15, IRS Commissioner Doug Shulman said. The final total far surpasses the number who disclose offshore accounts in a typical year — about 100 — and comes amid a broad U.S. crackdown on international tax evasion at Swiss bank UBS AG and other institutions.

“To put it simply, this is a historic milestone for the nation’s hardworking taxpayers,” Shulman said in a conference call from Washington.

The total in taxes, interest and penalties collected from those in the voluntary disclosure program will be in the “billions of dollars,” Shulman said. The disclosures involved accounts on every continent but Antarctica.

Taxpayers flocked to the amnesty program after the U.S. reached an agreement in August with the Swiss government and UBS to obtain names of 4,450 U.S. taxpayers believed to be hiding assets in secret bank accounts. Earlier this year, UBS paid a $780 million penalty under a deferred prosecution agreement filed in a Florida federal court that included disclosure of an additional 150 names.

Seven of those people have been charged criminally, with at least two getting sentenced to prison time.

Shulman said the combination of the UBS disclosures and the amnesty program have fundamentally changed the offshore tax landscape, particularly in Switzerland where bank secrecy was the tradition for centuries.

“It shows we are serious about piercing the veil of bank secrecy,” he said. “The whole game has changed.”

Also Tuesday, the IRS and Swiss unveiled the criteria being used to determine which American UBS accounts will be disclosed under the August agreement.

Accounts being targeted include those that contained 1 million or more Swiss francs at any time between 2001 and 2008; instances in which there was clear fraudulent actions, such as false documents; and accounts that earned an average of 100,000 francs a year for at least three years.

The equivalent amounts in U.S. dollars vary widely depending on the year, as the dollar lost over a third of its value against the Swiss franc during that period. One million francs was worth about $600,000 in 2001, compared with about $900,000 seven years later.

U.S. Sen. Carl Levin, who chairs Senate Permanent Subcommittee on Investigations, called the criteria “disappointing” because it means some of Switzerland’s bank secrecy will remain intact.
“It complicates and muddies what should have been a straightforward agreement by UBS and the Swiss government to disclose Swiss accounts hidden from the United States by U.S. account holders,” said Levin, D-Mich.

The Swiss have until the end of August to hand over the names. Swiss officials said the first 400 names will be chosen by the end of this week, with another 100 expected to be ready by the end of the month. Those taxpayers who are picked for disclosure can appeal to Switzerland’s top administrative court.

The stock market’s huge rally since March was initially led by smaller stocks, because small caps were hit the hardest on the way down. But small caps aren’t looking that cheap anymore, and in October, the Russell 2000 index of small-capitalization stocks sank 6.9%, snapping a seven-month winning streak, while the Dow closed at its highest level in 2009.

Since March, the Dow has jumped 57% and the S&P 500 has gained 62%, but there is a problem. What will the markets do when the very thing that has boosted the market dries up? The U.S. government has spent nearly $1 trillion to stimulate the economy and the Federal Reserve has maintained a policy of keeping interest rates near zero. Those will disappear as the economy’s health improves, potentially halting the bull market by taking away what has been its crutch…cheap and plentiful money.

“And I’m proud to be an American, where at least I know I’m free. And I won’t forget the men who died, who gave that right to me.” ~Lee Greenwood