UBS U.S. Clients Sue in Switzerland -- Dumb or Smart?

The New York Times reported today that some "wealthy" U.S. taxpayers are suing UBS and Switzerland's Financial regulators to prevent the disclosure to the IRS of their identities. I have previously blogged here the truism that behavior of this general genre (steps to hide the ball) can refresh the six-year criminal statute of limitations. Of course, given the fact that these taxpayers' behavior in keeping the money offshore and their identities hidden was continuing up to this point, the statute of limitatations is not a problem for the Government for the more recent years and, in any event, there might well be other acts that refreshed the statute of limitations for earlier years. Moreover, the mere filing of the suit could be a separate act of tax obstruction under Section 7212 and/or, if in concert as it apparently was, a Klein conspiracy, and each further act (say, e.g. pleading), would be an overt act as well as an act refreshing statutes of limitations on those crimes and earlier crimes. And, of course, taking this type of further evasive and delaying action might well disqualify these gents and, presumably, ladies from being able to strike a deal without opening up years earlier than, say, 6 years ago.

So the question to ponder is whether this move was so smart after all. Sometimes it is better to 'fess up when caught with your britches down (at least that's what people who have been caught with their britches down tell me). This is particularly apropos here where 'fessing up, properly handled, would permit these taxpayers to dodge the criminal prosecution bullet. And, in this regard, as I noted earlier, the Government cannot prosecute all of these guys, so why would anyone want to stand out from the crowd in this way, particularly when this lawsuit is unlikely to affect final resolution of the matter? (I am assuming in this regard that the Government will eventually, well within the criminal statute of limitations, find out who participated in this law suit adventure.)