Wednesday, September 23, 2009

White Collar: UBS to Notify Customers of IRS Interest

Swiss banking giant UBS will notify customers if their accounts are of interest to the IRS in its investigation of tax evasion through the use of UBS accounts. Based upon a previous agreement between the bank and the U.S. Department of Justice, UBS had agreed to supply banking information for 4500 of its American account holders who are suspected of tax evasion by the IRS.

The decision to notify the American account holders comes as a result of a decision by a Swiss court. The court in Lugano, Switzerland, ruled that the bank had to disclose to two American account holders whether their banking information was among that forwarded to the IRS. In assessing the impact of the court's order, UBS has decided that it must provide the information to all 4500 of those whose accounts are at issue.

This ruling and subsequent decision by UBS will have a significant effect on both the bank's account holders and the IRS. There is an obvious benefit to the account holders in knowing whether they are within the focus of the IRS investigation. The United States had hoped to keep the identities of the individuals on the list secret for a longer period. This is because the IRS is offering an amnesty program for Americans with undisclosed assets abroad. The amnesty allows individuals with such undisclosed assets to come forward and pay taxes without fear of criminal prosecution. Additionally, those taking part in the amnesty will face a reduced monetary penalty. The response to the program by those with hidden assets abroad has been so great that the IRS has decided to extend the program.

For an article concerning the UBS decision, please see The Miami Herald, "UBS: We'll Say Who Is on IRS List," September 23, 2009, p. C1,

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