UBS, U.S., Swiss Complete Tax-Evasion Settlement

R.A. Hettinga rah at shipwright.com
Wed Aug 19 08:01:43 PDT 2009


"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#printMode 
 >

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.





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