Swiss Bank UBS

The Tax Attic with Jerry Coon

September 3, 2009 // 0 Comments

Swiss banks give up names, information Recently, there has been much publicity that the U.S. government has worked out an agreement with a Swiss bank, UBS, wherein the bank will provide taxpayer identification and investment information to the Internal Revenue Service. We all know the old saying, “Never say never.” The saying definitely applies to this situation. Since the 1800s, the Swiss banks have steadfastly refused to provide any bank account information to any outside authority. They would never give up the names of their investors, let alone provide actual investment account figures. The Swiss even told Adolph Hitler to go jump in a lake. The Swiss banks have steadfastly relied upon Swiss law to not comply with any and all foreign government requests for investor information. Under Swiss law, tax fraud or actively misleading authorities is a crime. However, under their system, passive tax evasion or just failing to declare an asset is not a crime. If the foreign authority could prove the investor was involved in tax fraud or actively misleading authorities, they got their information. I have the feeling they didn’t have to provide much information. In 2002, the European Union began asking for information for investors who were not defined as criminals under Swiss law, and it was successful in some of its requests. Evidently, the Swiss did not and do not want to be known as an “uncooperative tax haven.” They have made quite a reputation as a tax haven but not an uncooperative one. Using the same logic as the European Union, the IRS sued UBS, asked for names, and also was successful. UBS agreed to pay $780 million in penalties and offered to turn over information on 250 U.S. investors. The IRS took the $780 million but sued for information on 52,000 investors. That figure was negotiated down to 4,450 names, presumably the top dogs. The IRS is giving those 4,450 U.S. citizens the chance to fess up on their own by filing missing tax returns or amending tax returns to include missing income. They are offering a type of limited amnesty for those who step forward. The penalties will be much less severe. Talk about being between a rock and a hard place. First, it’s not clear […]