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In another blow to Swiss bank privacy and secrecy laws, UBS agreed to identify 4,450 of its U.S. clients sought by the IRS for allegedly hiding assets abroad illegally in order to avoid U.S. tax penalties. The identities of these now 'cachet-less' Swiss bank accounts and their holders will be revealed.
Acting as an intermediary of sorts, the Swiss government agreed, under a written agreement with the U.S. to respond to treaty requests concerning tax information on UBS clients, by transmitting such requests to the Swiss bank, and ordering UBS to comply with the request covered under the countries' tax treaty.
Other Swiss banks doing business in the United States should not rest easy, however. The agreement says that the Swiss Government agreed to review and process additional requests from U.S. tax authorities for information from other banks about their U.S. clients.
While the IRS agreed to institute a Voluntary Disclosure Program for U.S.-based holders of Swiss bank accounts having them pay just 20% of the amount of their federal taxes that were underpaid for the past six years, and 20% of the highest value of the account over the past six years -- in addition to all their unpaid taxes and interest due on those taxes -- not all U.S.-based UBS clients with Swiss banks accounts will be eligible to benefit from this program.
If the IRS can identify delinquent U.S.-based UBS clients who failed to pay their federal taxes, and do so without account holders voluntarily coming forward on their own, the Justice Department may still prosecute them if it chooses.
Here is the August 19, 2009 Agreement between the U.S. and Switzerland:
Here is the August 19, 2009 Settlement Agreement between the U.S. and UBS AG:
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