IRS Says It May Withdraw UBS Lawsuit After Handover of Swiss Account Data
Switzerland said it expects to deliver account data on almost 4,450 UBS AG clients suspected by the U.S. of tax evasion, prompting the Internal Revenue Service to say it will drop a lawsuit against the bank within months.
The dispute stems from a U.S. crackdown on offshore tax evasion, marked by an IRS lawsuit in February 2009 that sought data on as many as 52,000 UBS accounts. The bank settled the so- called John Doe summons case in August 2009 by agreeing to hand over data on 4,450 accounts. The Swiss Federal Tax Administration said today it surrendered about half of the accounts.
“Based on information received to date and assurances by the Swiss Government, we anticipate being in a position to withdraw the John Doe summons this fall,” the IRS said today in a statement.
UBS, Switzerland’s biggest bank, avoided U.S. prosecution in February 2009 by paying $780 million, admitting it helped wealthy Americans evade U.S. taxes from 2000 to 2007, and handing over account data on more than 250 U.S. clients. The next day, the U.S. sued UBS in Miami, seeking data on 52,000 accounts.
“UBS can close the chapter on the suspected tax evaders now,” said Franco Taisch, a professor of business law at the University of Lucerne. “The bank has overcome that burden and can focus on its future business.”
Some of the data have yet to be delivered because clients can still appeal, said Mario Tuor, a spokesman for the State Secretariat for International Financial Matters.
Few Appeals
“Judging by what has happened so far, I don’t expect many clients to appeal,” Tuor said. “That means most of the 4,450 accounts will be delivered.”
UBS expects the implementation of the treaty to be completed in “the coming weeks,” the Zurich-based bank said today in an e-mailed statement. The withdrawal of the IRS case in Miami is “expected to occur soon,” UBS said. “UBS remains confident that a final resolution of the U.S. case will be achieved in October.”
A Swiss court almost scuttled the deal in January, ruling that it wasn’t enforceable under current Swiss legal provisions. Swiss lawmakers rescued the deal in June.
Since February 2009, the U.S. Justice Department has filed criminal tax charges against 17 UBS clients in the U.S., two UBS bankers and three others accused of aiding tax evasion.
To contact the reporter on this story: Klaus Wille in Zurich at kwille@bloomberg.net; David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net.
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