Justice Dept. Takes Aim at UBS, Again
Feds want names of clients who allegedly sheltered money.
Feb. 19, 2009— -- One day after agreeing to pay $780 million in fines for tax evasion, Swiss banking giant UBS AG again finds itself in the Justice Department's crosshairs, facing a related lawsuit seeking the names and identities of up to 52,000 clients who allegedly sheltered money in the bank's overseas accounts.
Government prosecutors have asked that a federal court enforce an IRS summons seeking the clients' names and identities.
UBS agreed Wednesday to pay fines and enter into a deferred prosecution agreement with the Justice Department, agreeing to identify U.S. customers who engaged in tax fraud.
Under the arrangement, UBS agreed to provide only the names of individuals who have been proven to have engaged in tax fraud. Now, however, the Justice Department is seeking to enforce its earlier request for the full universe of names of U.S. clients who have accounts with UBS in Switzerland.
The suit, filed today in Miami, concerns a treaty dispute between the United States and Switzerland over access to Swiss bank records. The disagreement stems from a June 2008 request by the IRS and Justice Department to serve an IRS "John Doe" subpoena to obtain records from UBS seeking information about all its U.S. clients.
According to documents filed by a senior IRS official, "The United States has learned that UBS maintained as many as 52,000 undeclared accounts for U.S. taxpayers, all of which are subject to the summons. Based on the best information presently available to me, it appears that the Treaty Request may only result in the production of records for, at most, about 300 of those 52,000 accounts."
The declaration by IRS Deputy Commissioner Barry Shott also disclosed that after talks between U.S. officials and the Swiss government, "The Swiss Government had made the final determination to provide the requested records for only twelve accounts."
According to the IRS, the 12 U.S. account holders have also filed lawsuits in Switzerland to prevent the government from releasing their names.
"The Swiss Government has not provided any records sought under the Treaty Request, and it is not clear when, if ever, it will," according to the IRS filing.
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