US: UBS tax deal to reveal secret data

20th August 2009, Comments 1 comment

The US-Swiss agreement signed on Wednesday will reveal an “unprecedented” amount of information to prevent tax fraud.

Washington -- The US government on Wednesday said an agreement with the Swiss government will make available an "unprecedented" amount of information on potential American tax evaders with accounts at UBS.

The US-Swiss agreement signed in Washington on Wednesday allows the governments to exchange information to prevent "tax fraud or the like."

The agreement "will result in the IRS receiving an unprecedented amount of information on United States holders of accounts at the Swiss bank UBS," the Internal Revenue Service and the Justice Department said in a joint statement.

"As a result of this agreement, the IRS will receive substantially all of the accounts that it was interested in when it initiated the John Doe summons against UBS," they said.

According to the agreement, information on about 4,450 UBS accounts held by US citizens will initially be provided to the US authorities.

"The agreement retains the US government's right, if the results are significantly lower than expected and other measures fail, to seek appropriate judicial remedies, including resuming actions to enforce" the civil complaint, the IRS and Justice Department said.

In mid-August the US government and UBS finalised an out-of-court settlement to end the tax secrecy case aimed at forcing the bank to supply names of as many as 52,000 American account holders.

Under Swiss banking secrecy law, banks in Switzerland are prohibited from revealing any information to authorities or any third parties about their clients, except in cases involving recognised criminal investigations.

The US civil case stems from a settlement of a criminal complaint earlier in 2009 in which UBS admitted to tax fraud by inviting rich US clients to open accounts in Switzerland to avoid declaring their income to the US. The bank paid USD 780 million (CHF 832 million) to settle the criminal case.

The United States has pressured Switzerland and UBS since the tax fraud case first emerged in a Florida court last year. In July 2008 UBS announced it was halting offshore banking services for US citizens as a result of the probe.

Under a separate agreement signed Wednesday between UBS and the US government to settle the civil case, UBS is not required to make any financial payment.

The IRS and Justice Department said that the agreement process will begin with an IRS request to the Swiss government describing the accounts for which it is seeking information.

The Swiss government will then direct UBS to begin releasing information on the accounts to the IRS.

"The IRS will receive information on accounts of various amounts and types, including bank-only accounts, custody accounts in which securities or other investment assets were held and offshore company nominee accounts through which an individual indirectly held beneficial ownership in the accounts," the statement said.

The UBS agreement has implications for other banks, the statement said.

"The Swiss government has agreed to review and process additional requests for information for other banks regarding their account holders to the extent that such a request is based on a pattern of facts and circumstances equivalent to those of the UBS case."

The IRS will examine the information provided for potential civil and criminal tax violations, the statement said.

"Individuals whose information is obtained by the IRS through this process will, by longstanding policy, not be eligible for the voluntary disclosure program."

AFP / Veronica Smith / Expatica

1 Comment To This Article

  • Al posted:

    on 21st August 2009, 03:20:53 - Reply

    this is a travesty of justice and yet another example of what the world gets allowing one country to rule it. It also is an example of what the Swiss get when they started to bow to foreign interests and powers like the EU, UN, etc. It is too bad because Switzerland formerly was a free, democratic country but now seems to be yet another US or EU sateliite. A shame. Instead of picking on small countries like Switzerland countries like USA, Germany, etc that want Switzerland to eliminate privacy should ask themselves-- if they didn't have such confiscatory taxation schemes would their citizens, alledgely, be trying to hide assets? Maybe those countries should reexamine their near-theft levels of taxation. So Switzerland has joined in the "big brother" USA/UK police state system. A sad day.