The U.S. Internal Revenue Service dropped its demand for the identities of Americans who hold secret offshore bank accounts at UBS AG (UBSN), after concluding it will learn the names of more than 7,500 names of the bank’s customers.
IRS Commissioner Douglas Shulman said the agency was withdrawing its “John Doe” summons against the Swiss bank. Shulman said the IRS investigation has prompted voluntary disclosures by 18,000 Americans, including thousands with accounts at other banks.
About 3,000 Americans have come forward in the year since the IRS ended an official program to grant some leniency for voluntary disclosures, Shulman said in a statement.
“We are finding that many of these voluntary disclosure cases involve significant amounts of previously unpaid tax,” Shulman said. He said the agency has collected on average $200,000 in taxes, penalties and interest per case.
The IRS began its investigation into UBS in June 2008 after a former banker, Bradley Birkenfeld, pleaded guilty to conspiracy and said the bank helped wealthy U.S. citizens conceal $20 billion in assets and evade income tax laws. The IRS today concluded UBS has met the terms of an agreement in August 2009 to reveal customers’ identities.
Shulman said the IRS already has received the identities of 4,000 UBS customers and expects the final count to exceed 7,500.
“When people cheat on their taxes, the vast majority of honest U.S. taxpayers suffer the consequences and have to make up the difference,” Shulman said. “We will tirelessly pursue anyone who tries to use international borders to their advantage and cheat honest taxpayers.”
The UBS case has been a centerpiece in a U.S. crackdown on offshore tax evasion. Since the deferred-prosecution agreement, the Justice Department has filed criminal charges against 17 UBS clients in the U.S., two UBS bankers and three others accused of aiding tax evasion. At least 150 other people are under criminal investigation, the Justice Department has said.
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. The IRS uses the John Doe summons when it is investigating possible tax fraud by people whose identities are unknown.
In October, the U.S. Justice Department decided to withdraw a criminal case against UBS, saying the bank complied with the agreement. In settling the criminal probe, UBS paid $380 million to disgorge profits from its cross-border business from 2001 to 2008, and $400 million in interest, penalties and restitution for unpaid taxes.
To contact the reporter on this story: Ryan J. Donmoyer in Washington at email@example.com