The IRS-UBS Tussle Comes to a Close
The long-running dispute between the IRS and UBS Bank of Switzerland that escalated into a diplomatic standoff between the governments of the two countries has finally come to a conclusion. At one point of the dispute, Secretary of State Hilary Clinton had to discuss this matter with the Swiss foreign minister, Micheline Calmy-Rey on July 31 this year. The point of contention stems from the fact that UBS allowed about 52,000 wealthy Americans to deposit millions of dollars into their accounts allegedly without paying taxes on them. The dispute raged on when the Swiss government threatened to block UBS from disclosing the information if compelled by the US and the US counter-threatening to indict the bank if it does not comply with the court order to reveal the details.
This is not the first time the Swiss bank had gotten into trouble with the IRS. In February, UBS had already revealed the identities and banking details of 250 of its American clients to the IRS and paid $780 million in settlement of charges that it assisted its clients to evade taxes on nearly $20 billion in its offshore bank accounts. But that did not fully satisfy the IRS. It subsequently filed a suit against UBS to have them reveal the rest of the information on their American account holders suspected of evading taxes. The bank initially resisted it citing that Swiss banking secrecy laws would be violated should they comply with the suit. The impasse dragged on until now.
Finally, the two parties have hammered out a settlement to the ordeal. Although the details of the agreement are not disclosed, it is widely believed that UBS will reveal details of thousands of their American account holders. In what is seen as a victory for the American government, the IRS now has the means to investigate each individual account holder for possible tax evasion. All the while, it was implied that the bank intentionally took advantage of Swiss banking secrecy laws to market its products and services to rich Americans. Against this backdrop, it was imperative for UBS to reveal the required information, at least in part. Not doing so at all would be akin to committing business suicide. The US government could indict the bank or cancel its license to do business in the United States.
Apparently the pact between the two sides involves UBS revealing information on some 8,000 suspected tax-evading American account holders, not all of the 52,000, yet. But this is likely to satisfy the IRS for now as they begin investigations. Should they find that some or all of these 8,000 have indeed transgressed tax laws, the IRS would have the right to demand further revelations of more accounts.
This is how things stand at this point in time. Who knows, we may hear more developments in days to come.
Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 1-888-GET-MISH.
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