"Regulatory Arbitrage", as Eric Hughes liked to call it on cypherpunks, is officially dead. Cheers, RAH -------- <http://online.wsj.com/article/SB125007792394025747.html?mod=djemTEW#printMod...
The Wall Street Journal AUGUST 12, 2009, 5:22 P.M. ET UBS, U.S., Swiss Complete Tax-Evasion Settlement By CARRICK MOLLENKAMP and LAURA SAUNDERS Swiss bank UBS AG and the U.S. and Swiss governments have settled a long-running tax-evasion probe, a Justice Department attorney told a federal court Wednesday morning. Details of the pact were not provided during a teleconference with U.S. District Judge Alan Gold. Justice Department attorney Stuart Gibson said initial documents had been signed and final forms were awaiting signatures. It's likely UBS will turn over thousands of client names to the Internal Revenue Service as part of the settlement. The case centers on the Internal Revenue Service's efforts to obtain the identities of some 52,000 accounts so the revenue collector can investigate off- shore tax evasion by UBS clients. UBS, in a statement, declined to discuss the details. The Zurich bank said it welcomed the agreement. Justice Department representatives weren't immediately available for comment. A statement by IRS Commissioner Doug Shulman provided a sense of timing on releasing details of the pact. Mr. Shulman said, "We will release more details when the Swiss government signs the agreement as early as next week." UBS and the Swiss government had fought the effort, citing Swiss bank privacy. Lawyers involved in the case now believe UBS will agree to turn over some 8,000 to 10,000 account identities. The parties first officially said they were in talks in mid-July. That set off a month of back-and-forth discussions that underscored the difficulty in reaching a pact. A critical component of the settlement will be the process for turning over the names to the IRS. Lawyers representing UBS clients believe that one route may be for UBS to hand the names to the Swiss government, which then would notify the UBS clients that they can appeal in Switzerland. A flurry of clients already had been coming forward through a so- called voluntary disclosure program that allowed them to acknowledge unpaid income tax. That process had saddled the IRS with a flood of paperwork, leading the IRS to recently streamline the process. The settlement could represent a significant victory for the IRS and the Justice Department depending on how many names the IRS obtains. The IRS's case --effectively a civil court request to a federal court to force UBS to provide the accounts -- already had yielded documents detailing the inner workings of how UBS and its vaunted private bank helped U.S. clients. The settlement on Wednesday had run on a parallel track with a criminal inquiry that in February led UBS to agree to a $780 million settlement and to turn over some 250 names.