Trust Updates Archive
(August 20, 2009--Chicago, IL) -- In a deal that many thought impossible, the Swiss government yesterday agreed to give the IRS access to 4,450 UBS accounts belonging to U.S. taxpayers. Some of those taxpayers could see the entire value of their foreign accounts consumed in back taxes and penalties. The agency’s agreement on UBS is widely seen as the tip of iceberg in its pursuit of tax havens and tax evaders. This is underscored by the August 14 election of Donald Shulman, IRS Commissioner, as the new chair of an international tax oversight body.
"This [agreement with the Swiss Government] should send a signal, no matter what institution you're with, the IRS is willing to pursue both the institution and the individual," says Shulman.
Yesterday’s agreement effectively ends civil action against UBS by the U.S. Department of Justice. In February, UBS agreed to pay $780 million and disclose account information to the IRS (Click Here). The Swiss government, which was not a party to the February settlement, initially moved to block the disclosure.
The Swiss government’s decision opens the door for the IRS to request information from other Swiss banks. Support has been growing for ending bank account “secrecy,” for which the Swiss are famous, since a former Liechtenstein bank official provided tax officials in Germany and the United Kingdom with information on tax shelter accounts in that country. Though unconfirmed by the IRS, sources say that the agency is seeking information from Credit Suisse, Julius Baer, Zuercher Kantonalbank and Union Banque Privee
In addition to back taxes, U.S. taxpayers who have foreign bank accounts may not have filed a Foreign Bank and Financial Account report. The penalty for failing to file the FBAR can be as high as 50 percent of the value of the account. Under a voluntary disclosure program, certain taxpayers can lower penalties and fines owed on unreported taxes (Click Here). Under the program, taxpayers may be eligible to file late FBARs until September 23.
"Once the Swiss government turns over names, all bets are off," Shulman warns, urging taxpayers to step forward sooner than later.
The IRS will be sending notifications to UBS account holders in stages, meaning many may not receive that notice until after September 23. Tax attorneys say the IRS and the DOJ view voluntary disclosure favorably, which can be beneficially to avoiding criminal prosecution. Following the February settlement with UBS, the DOJ filed a number of cases against individual taxpayers involving UBS and other foreign bank accounts.
Shulman, in addition to serving as IRS Commissioner, is the new chair of the Forum on Tax Administration of the Organization for Economic Co-operation and Development.
For more on this topic, including FBAR filing requirements for pension funds, see the upcoming issue of Trust Regulatory News.
No statement in this issue is offered as or should be construed as legal opinion or advice or as an indicator of future performance.
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