IRS gets a key to Swiss bank accounts
By Aaron Smith, CNNMoney.com staff writer
NEW YORK (CNNMoney.com) — The Internal Revenue Service announced Wednesday that it has reached a deal with the Swiss government, gaining access to thousands of UBS AG accounts that Americans might have used to avoid paying taxes.
“Thousands of taxpayers who avoided paying taxes in the past are being brought into compliance,” said IRS Commissioner Douglas Shulman in a teleconference with reporters. “As this agreement demonstrates, the world of international taxes has drastically changed.”
An IRS press release stated that 4,450 accounts held by rich American investors were included in the settlement.
In the teleconference, Shulman said the IRS expects to gain access to a total of more than 5,000 UBS (UBS) accounts, through the IRS-UBS settlement, combined with a voluntary disclosure program and “other sources.” He said these accounts have held $18 billion in assets at one time, though he did not have a current tally for their value.
A UBS spokeswoman would not comment on the value of the accounts and referred questions to a company press release. In the release, UBS Chairman Kaspar Villiger said the settlement “helps to resolve one of UBS’ most pressing issues.”
“I am confident that the agreement will allow the bank to continue moving forward to rebuild its reputation through solid performance and client service,” said Villiger. “UBS welcomes the fact that the information-exchange objectives of the settlement can be achieved in a lawful manner under the existing treaty framework between Switzerland and the United States.”
Deterrent: The announcement is the result of a settlement that the IRS and Switzerland-based UBS reached earlier this month to track down and identify wealthy Americans who have avoided paying taxes by hiding their assets in offshore accounts. Shulman said the deal should deter Americans from evading taxes in the future.
Shulman said investors who evaded taxes through UBS can avoid prosecution by reporting their tax activity by the Sept. 23 voluntary disclosure deadline, so long as they meet certain requirements.
“Although the clock is ticking, there is still time for you to come in and get right with your government,” said Shulman. “Talk to your tax professional.”
Asher Rubinstein, an offshore attorney with New York-based Rubinstein & Rubinstein, said that some of his clients have participated in the voluntary disclosure program. He said that taxpayers have to provide “complete and honest disclosure” and cannot participate if their funds are the proceeds of illegal activity.
“This is a government that is in need of cash, and the IRS is trying to raise the cash,” said Rubinstein, explaining the incentive for the program.
He said that the IRS was initially seeking 52,000 accounts and received about 5,000, so it wasn’t a complete victory. But still, he said the landscape has changed dramatically for U.S.-based tax evaders.
“The bottom line is that the days of tax havens are gone,” said Rubinstein. “If you’re a wealthy American, you can’t just expect to stash your money in the Cayman Islands or Switzerland or Liechtenstein and expect to be off the IRS radar.”
Shulman said during the teleconference that the IRS was “never interested in pursuing 52,000 accounts and this was never an IRS number. “Remember,” he explained, “we filed this lawsuit when the Swiss government was taking the position that we could not have access to any of these accounts. That posture changed in the past month and we were able to gain access to the accounts we wanted.”
First Published: August 19, 2009: 10:11 AM ET