UBS (and some of its wealthy US clients) in the soup

UBS, one of the banks that took a huge hit from the subprime mortgage crisis, is in the news again, this time for what appears to be assistance to wealthy US clients in evading US taxes by creating offshore entities to hold the UBS accounts and then failing to provide required information on those accounts to the US government.  The Justice Department has now asked a court to serve an IRS summons on the bank for names of those wealthy US clients, who may now be subject to everything from civil to criminal fraud for tax evasion, and a judge has cleared the request.  See this NY Times story by Browning and Werdigier this morning, and this Justice Department release indicating that former employees have estimated that at least $20 billion in assets may have been hidden from the U.S. Treasury Department in undeclared accounts.   Penalties for failure to report foreign-held assets are quite large--up to 50% of the assets held, after changes made to those requirements in recent years.

The US, of course, has an ace in the hole in this investigation, the UBS banker Bradley Birkenfeld who pled guilty to conspiring to defraud the IRS and has turned state's witness on the bank's secretive practices.

IRS Commissioner Doug Shulman got it right--these US citizens who are hiding their assets to evade their tax liabilities are "short-changing the nation" as a whole.  See Shulman statement in BNA.  Shulman added:

A few wealthy individuals eagerly embrace the benefits of a global marketplace, but yet they do not take the basic steps of paying what they owe back to the nation. People should be ashamed of hiding money in offshore accounts, while tens of millions of people of more modest means honestly and accurately pay their taxes each year.  Id.

These wealthy individuals shouldn't be able to get away with hiding their assets, and the bank that aided them in doing it should lose the respect of its law-abiding customers.

Comments

[Alive and well]

Those who think a Bank the size of UBS will just lay down and give in to the US better wipe the shit from their eyes. UBS is having a hard time with Sub prime, now this, they will make sure to protect those who helped build the bank by using their money. Finally I think the Germans during WWII had a better chance of finding out clients of swiss banks - not the US.