Europe

UBS to Hand IRS U.S. Client Details


The US and Swiss governments have reached a landmark agreement that will see UBS, the Swiss investment bank, hand over the details of 4,450 accounts of American clients suspected of tax evasion over many years.

The accounts could hold up to $18bn (£11bn) and the agreement is a coup for the US tax authorities who have been battling the secrecy of the Swiss banking system for decades. The case had threatened to strain diplomatic relations between the two countries.

Doug Shulman, the commissioner of the Internal Revenue Service in the US, said: "I believe this agreement gives us what we wanted—access to information about those UBS account holders most likely to have been involved in offshore tax evasion." Some of the accounts, which held $18bn at one time, have already closed.

Mr Shulman: "This is an unprecedented amount of information on taxpayers who've evaded their tax obligations."

Yesterday's agreement does not require UBS to make a payment. On 18 February, UBS admitted to tax fraud in the US and agreed to pay $780m, as part of a provisional settlement. But a day later, the US Justice Department, on behalf of the IRS, said they were still pursuing a civil lawsuit seeking to access details on 52,000 UBS clients. Last week, the US authorities said it would terminate its legal action in the US against the Swiss bank once the final deal was signed.

UBS will write to the affected US holders of the 4,450 accounts encouraging them to take advantage of the amnesty until 23 September to voluntarily disclose information.

Jim Mastracchio, a partner with the US law firm Caplin & Drysdale, said: "The IRS has left the door open for UBS account holders—or anyone with an undeclared foreign account regardless of location—to come forward. Once the IRS has your name and begins an investigation, a voluntary disclosure will no longer be available and the taxpayer will face stiff civil penalties and possible criminal prosecution." He added: "This is an unprecedented settlement."

The UBS chairman, Kaspar Villiger, said: "This agreement helps resolve one of UBS's most pressing issues. I am confident that the agreement will allow the bank to continue moving forward to rebuild its reputation through solid performance and client service. UBS welcomes the fact that the information-exchange objectives of the settlement can be achieved in a lawful manner under the existing treaty framework between Switzerland and the United States." Four US customers of UBS have reportedly already been successfully prosecuted.

The Swiss government said the agreement only applies to UBS and the secrecy of its banking system is maintained. The Swiss justice minister, Eveline Widmer-Schlumpf, said "there was no alternative to this solution". Under US law, American citizens have to provide the IRS with data on offshore accounts holding more than $10,000.

We Almost Lost the Nasdaq
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus