OUR THOUGHTS ON:

Swiss Parliament Clears Way for UBS to Release Names of UBS Offshore Clients to IRS

Tax

By Ron Kramer

On June 17, 2010, the Swiss parliament approved a law that will allow the Swiss government to turn over the names of possible U.S. tax evaders to the Internal Revenue Service (IRS). In August 2009, UBS agreed to turn over the names of 4,450 U.S. citizens who held offshore accounts in Switzerland. The pact resulted from the U.S. Justice Department’s accusation that UBS helped wealthy Americans evade taxes on upwards of $20 billon of income hidden in the offshore accounts. The U.S.-Swiss pact faced strong opposition from Swiss legislators who believed that the agreement would bring the long standing tradition of Swiss banking secrecy to an end.

Last year, the IRS provided an amnesty program that encouraged U.S. citizens having previously unreported foreign accounts and/or income from those accounts, to come forward on a voluntary disclosure basis to avoid criminal prosecution or stiff penalties for the undisclosed accounts.

All 4,450 names of U.S. citizens having secret UBS accounts are due to be released to the IRS by August 2010. Accordingly, those U.S. taxpayers that may be on the UBS list, and who did not take advantage of the 2009 amnesty program, or, who now, do not initiate their own voluntary disclosure proceeding with the IRS before August 2010, should expect little sympathy or relief from the IRS from possible criminal prosecution and severe penalties on any undisclosed accounts provided by UBS to the IRS. A U.S. taxpayer can face up to five years in prison for tax evasion.

The new Swiss law could open the door for the IRS to request information from other Swiss banks, or other banks identified by taxpayers during the 2009 amnesty program.

Schneider Downs provides accountingtax, wealth management and business advisory services through innovative thought leaders who deliver the expertise to meet the individual needs of each client. Our offices are located in Pittsburgh, PA and Columbus, OH. 

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax-related matter.

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