UBS must name clients

WASHINGTON – Thousands of Americans who thought they had a secret Swiss bank account will have their names and account details given to the U.S. Internal Revenue Service under an agreement announced Wednesday among U.S. and Swiss authorities and the Swiss bank UBS.

The IRS said Americans would no longer be able to evade taxes so easily by hiding their assets in offshore accounts.

The agreement comes as U.S. tax authorities conduct a criminal investigation into Americans who used Swiss bank accounts at UBS AG to avoid paying U.S. taxes.

The settlement follows demands from the U.S. authorities that the bank hand over details on more than 50,000 customers. According to the settlement, U.S. tax authorities will gain access to 4,450 accounts Americans have with UBS, and will drop a lawsuit against UBS in federal court demanding the names.

However, the agency expects to have access to hundreds of additional accounts through other agreements. An IRS official said the total number of names disclosed could be in the “high 5,000s.”

“Wealthy Americans who have hidden their money offshore will find themselves in a jam,” said IRS Commissioner Douglas Shulman. “You can expect us to continue to be aggressive with institutions that are helping Americans avoid taxes.”

U.S. authorities are building criminal tax-evasion cases against more than 150 Americans who held accounts with UBS. He added that the accounts considered as part of the settlement held over $18 billion at one point.

The Swiss have agreed to turn information about the U.S. accounts over to the IRS. A U.S. citizen can choose to appeal the case in a Swiss administrative court. The UBS clients are expected to receive notices in the mail in the next few weeks.

It could take months for the information to come to the IRS, an agency official said.

However, Shulman pointed out that the settlement represented a major improvement in the U.S. government’s ability to gain access to information about U.S. tax avoiders.

“We started the negotiations at a point when the Swiss government took the position that we could not get access to the information, so we felt we needed to go through a U.S. court process to proceed,” Shulman said. “About a month ago that posture changed. The Swiss government came to us and said they wanted to negotiate.”

Anthony Sabino, professor of law and business at St. John’s University in New York, said the agreement represents a “new era in international law enforcement,” because for the first time the Swiss government is willing to bend their “ultra-secret” bank secrecy laws.

“If the Swiss government cooperates on UBS, it will cooperate on other Swiss banks,” Sabino said. “The pressure has been building against the dam for years, and now you’re going to see a flood of information coming out. It is a signal that as capital moves with light speed over national borders, tax agencies and other governmental authorities will not be far behind.”

Shulman pointed out that U.S. citizens have until Sept. 23 to voluntarily disclose their tax-avoidance or face “stiffer civil or possible criminal” charges. He added that U.S. citizens with hidden UBS accounts can still voluntarily disclose their account information to U.S. tax authorities before the deadline even if they previously received a notice from the Swiss bank.