The Internal Revenue Service revised the information on its Web site about its voluntary disclosure program this week, but many taxpayers are still afraid to come forward.

As the agency cracks down more on tax shelters, income earned abroad, and money stashed overseas, clients are weighing the risks of coming forward voluntarily or waiting to get caught redhanded. This week, a third U.S.-based UBS client pled guilty to tax evasion (see Toy Exec Pleads Guilty in UBS Tax Case).

The IRS is embroiled in a case in a Miami court in which it is trying to force the Swiss bank to cough up information about 52,000 clients that it believes are U.S. citizens who are hiding their money in UBS coffers. There are conflicting accounts about how close the two sides are to settling, but the judge in the case appears to be getting impatient and he wants to hold a hearing on Monday.

The IRS is getting inundated with taxpayers seeking to make voluntary disclosures before a September 23 deadline, according to a story in today’s Wall Street Journal. Whereas last year, the IRS would respond to a request in two to three days, now it’s taking two to three weeks, said one source who was quoted.

But the voluntary disclosure can still be onerous and there’s no guarantee of clemency. According to the IRS’s newly revised information, “A voluntary disclosure will not automatically guarantee immunity from prosecution; however, a voluntary disclosure may result in prosecution not being recommended. This practice does not apply to taxpayers with illegal source income.”

The IRS is not only going after taxpayers whose money is secreted in Swiss bank accounts. The Obama administration and Congress are proposing a host of ways to tax various sources of foreign income, including revising the tax deferral rules. Ernst & Young hosted a webcast earlier today on cross-border legislative and regulatory activity. One of the guests was Rep. Richard Neal, D-Mass., chairman of the House Ways and Means Select Revenue Measures Subcommittee. He anticipates that Congress will act in the fall on international tax avoidance, and he added that international tax reform would be part of a bigger tax reform bill that Congress will pursue next year. Get ready for some major changes if that happens.

The administration’s fiscal year 2010 budget proposes to defer deductions allocable to deferred foreign source income, close foreign tax credit loopholes, and reform the “check the box” rules. Other proposals, according to Ernst & Young, would repeal the 80/20 company rules that limit earnings stripping by expatriated entities and limit shifting of income offshore through intellectual property transfers. Companies would not be able to claim deductions for expenses, other than research and experimentation expenses, allocable to offshore income until that income is taxed in the U.S.

Those are just some budget provisions designed to raise extra money for the Treasury. If the proposals go through, they could raise $159 billion to $210 billion, depending on whose estimates you believe. That’s serious relief for the federal budget, and maybe even enough to fund a bailout for another company or two.