Effective Sept. 23, the IRS will end its voluntary disclosure period allowing U.S. taxpayers to avoid criminal prosecution, put in place after it was revealed recently that thousands of wealthy Americans were illegally hiding money in Swiss bank accounts.

Although the cost of voluntary disclosure is significant, it is much less than the costs of being pursued, either civilly or criminally, by the U.S. tax authorities, the IRS said in a statement.

"The voluntary disclosure program has turned into a convenient revenue generator for the IRS," said Stephen Ziobrowski, a tax partner in the Boston office of Day Pitney LLP. "The IRS is able to collect significant past due taxes, interest and penalties without utilizing the resources that would be necessary to pursue these taxpayers on an individual basis."

The voluntary disclosure program was put in place after it was revealed that thousands of wealthy Americans were illegally hiding money in Swiss bank accounts.

The activity came to light when a former employee of the Lichtenstein bank, LGT, provided data to the German government in 2008 on foreign accountholders using LGT to evade taxes.

To date, the IRS has witnessed an overwhelming response to its voluntary disclosure program.