Swiss Bank to Turn in U.S. Tax
Evaders
By Gerri L. Elder
The largest bank in Switzerland has reportedly entered into
a deferred prosecution agreement with federal authorities in the U.S. The
country's secretive banking industry has long been attractive to wealthy
clients as an avenue to avoid paying taxes.
On Feb. 18, the Department of Justice announced UBS accepted
the agreement and will pay $780 million in fines, penalties, interest and
restitution. It also agreed to provide U.S. tax authorities with the names and
account information of approximately 250 U.S. customers. Under the agreement,
UBS will cease providing banking services to U.S. clients with undeclared
accounts.
The agreement will allow the bank to resolve criminal
conspiracy charges associated with helping its customers defraud the Internal
Revenue Service. Federal authorities had been investigating about 19,000
suspicious UBS accounts, which are believed to have held $20 billion between
2000 and 2007. According to the IRS, these accounts may have helped U.S.
taxpayers evade $300 million per year in taxes.
The settlement with UBS is believed to be the largest of its
kind. The U.S. government may prosecute UBS executives if the terms of the
agreement are not fulfilled.
During June 2008, a U.S. District Court allowed the IRS to
serve UBS with a "John Doe" summons to demand information on accounts
that may have been used to hide money from U.S. tax authorities. As a
"John Doe" summons does not have to name individual suspects, the
summons cast a wider net to catch potential tax evaders with the ultimate goal of issuing criminal charges against as many as possible.
As a result of the UBS investigation, Credit Suisse is now
asking its wealthy American clients to sign W-9 tax forms that will disclose
their names, addresses and tax identification numbers. The W-9 form also
requires the bank to withhold taxes that may be owed to the IRS, at a rate of
28 percent.
IRS Commissioner Doug Shulman issued a statement saying
those people who have used offshore bank accounts to evade taxes should regard
the UBS agreement as a directive to “get right with their government.” Those
who do not heed the warning may risk criminal prosecution for tax
evasion or tax fraud.
Swiss Finance Minister Hans-Rudolf Merz has announced
Switzerland's treasured banking secrecy remains in place, but added such
secrecy is not in place to protect tax fraud.