Some of our wealthiest have been hiding money from the IRS, now they
might be found out.
WSJ: The U.S. Justice Department sued UBS in Miami on Thursday, seeking to force the bank to disclose to the Internal Revenue Service the identities of 52,000 private customers -- more than double the number previously thought to be implicated in the tax probe.
The move followed the disclosure Wednesday that UBS had agreed under a deal with the Justice Department to turn over 250 account names as part of a tax-evasion investigation.
The events mark the latest chapter in moves by governments globally to cap secretive offshore accounts. But they also represent a new and perilous phase for UBS and Switzerland.
UBS faces the difficult task of convincing clients that they can continue to trust it, even as it fights an effort to turn over yet more clients' names. In a statement Thursday, UBS said it intends to fight the U.S. effort to gain access to the 52,000 names. UBS handed over the 250 names to Switzerland's regulator, the Swiss Financial Market Supervisory Authority, or Finma, which then provided the names to the U.S.
Can't wait to see who they are. But we may only find out the names of a few:
Court filings in Miami on Thursday show that the IRS appeared to be growing frustrated with an inability to gain access to the UBS names. Ultimately, the IRS believed that UBS had handled as many as 52,000 undeclared accounts for U.S. clients but that a treaty between the U.S. and Switzerland might lead to the production of only 300 accounts.
In January, Barry Shott, IRS deputy commissioner, spoke to Swiss authorities and learned that the Swiss government might turn over only 12 accounts -- and that those account holders would be allowed to appeal any handover in the Swiss courts, according to a Thursday court filing. Mr. Shott added that the Swiss government hadn't provided any records "and it is not clear when, if ever, it will."
The official release from the
U.S. DOJ: The government filed a lawsuit today in Miami against Swiss bank UBS AG, the Justice Department announced. The lawsuit asks the court to order the international bank to disclose to the Internal Revenue Service (IRS) the identities of the bank’s U.S. customers with secret Swiss accounts. According to the lawsuit, as many as 52,000 U.S. customers hid their UBS accounts from the government in violation of the tax laws.
The government alleges in the lawsuit that of those 52,000 secret accounts, about 20,000 contained securities and about 32,000 contained cash. According to a UBS document filed with the lawsuit, as of the mid-2000s, those secret accounts held about $14.8 billion in assets. Court documents allege that U.S. citizens failed to report and pay U.S. income taxes on income earned in those secret accounts.
According to the lawsuit, Swiss-based bankers actively marketed UBS’s services to wealthy U.S. customers within the United States. UBS documents filed with the lawsuit show that UBS bankers came to the United States to meet with U.S. clients nearly 4,000 times per year, in violation of U.S. law. According to court documents, the government alleges that UBS trained its bankers to avoid detection by U.S. authorities. Court documents further assert that many U.S. contacts occurred through UBS-sponsored sporting and cultural events, designed to appeal to extremely wealthy Americans.
The lawsuit alleges that UBS engaged in cross-border securities transactions in the United States that it knew violated U.S. security laws. The lawsuit also alleges that UBS helped hundreds of U.S. taxpayers set up dummy offshore companies, to make it easier for those taxpayers to avoid their reporting obligations under U.S. tax laws.
"At a time when millions of Americans are losing their jobs, their homes and their health care, it is appalling that more than 50,000 of the wealthiest among us have actively sought to evade their civic and legal duty to pay taxes," said John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division. "It is time for those who are trying to hide from the IRS to rethink their actions. The Department of Justice is committed to do all that it can to aid the IRS in locating those who would seek to hide behind secret accounts and in holding them accountable under the federal tax laws."
"We are committed to moving forward with the summons enforcement process. This action sends a strong signal to taxpayers hiding their money offshore. The IRS will be aggressive in pursuing people who shirk their obligations under the tax law. These people owe it to their fellow citizens to pay their fair share of taxes," said IRS Commissioner Doug Shulman. "As Commissioner, I am committed to bringing to bear the full arsenal of IRS resources to pursue egregious offshore tax abuse. International tax issues are a top priority, and we will continue to aggressively pursue people hiding assets offshore. For people who are hiding money offshore, this serves as a wake-up call that they need to get right with their government. Taxpayers should talk to a tax professional and come forward under our voluntary disclosure process. Having the IRS find you could mean a much heavier price than coming forward on your own."
