UBS to hand over names of 5,000 U.S. clients to IRS, DOJ

UBS AG agreed to give the U.S. Internal Revenue Service an “unprecedented amount” of information on thousands of U.S. holders of accounts at the Swiss banking group as part of a settlement with the Swiss government, the IRS announced Wednesday.

The agreement comes as U.S. tax authorities conduct a criminal investigation into Americans who used Swiss bank accounts of UBS to avoid paying U.S. taxes. The settlement follows demands from the U.S. authorities that the bank hand over details on thousands of customers. U.S. tax authorities will gain access to 4,450 accounts of U.S. individuals who have accounts with UBS, according to the settlement.

However, the agency expects to have access to hundreds of additional accounts through other agreements. An IRS official said the number of U.S. clients could be in the “high 5000s.”

“Wealthy Americans who have hidden their money offshore will find themselves in a jam,” said IRS Commissioner Douglas Shulman. “You can expect us to continue to be aggressive with institutions that are helping Americans avoid taxes.”

U.S. authorities are building criminal cases against more than 150 U.S. nationals who held accounts with UBS. He added that the accounts considered as part of the settlement held over $18 billion at one point.

The Swiss have agreed to turn information about the U.S. accounts over to the IRS. A U.S. citizen can choose to appeal the case in a Swiss administrative court. The UBS clients are expected to receive a notice in the mail in the next few weeks

It could take months for the information to come to the IRS, an agency official said.
“We started this negotiation at a point where the Swiss government position was we could not have access to any account,” Shulman said. “Now we’re at the point where the Swiss government has said they have every reason we will get access to these accounts.”

Shulman pointed out that U.S. citizens have until Sept. 23 to voluntarily disclose their tax-avoidance or face “stiffer civil or possible criminal” charges. He added that U.S. citizens with hidden UBS accounts can still voluntarily disclose their account information to U.S. tax authorities before the deadline even if they previously receive a notice from the Swiss bank. He added that bank notices will be sent out in stages and many letters may not be received by account holders until after the Sept. 23 voluntary deadline.

“The IRS will receive a significant portion of the account information after the Sept. 23 cutoff,” Shulman said.
The accounts have a variety of holdings including precious metals and other securities. Some are off-shore “sham trust accounts,” Schulman said.

UBS has already handed over details on around 250 customers and paid out $780 million. But it has also been facing a further demand from tax authorities that it provide details on 52,000 other U.S. clients who may have been involved in tax evasion.

Author: Paola