I wrote about this case a few months ago but it continues to make headlines.
It appears that UBS helped thousands of Americans hide their money from the US government in Swiss bank accounts. The previous investigation turned up a UBS document that said thousands of accounts were involved, far more than we knew about.
Now our fine government has decided to try to find these fine patriots and ask them to pay the taxes they owe. Appparently this is such a shock and violation of international law, it is turning into a major international legal incident. Go figure.
Where is the line between tax evasion (the Swiss say that's ok) and tax fraud (the Swiss agree thats a problem)?
If I make a mistake on my taxes, the IRS will eat my lunch but if I am rich enough to afford lawyers to keep me from paying taxes, well that is ok? I just love these stories of how the rich get different rules from the rest of us.
U.S. Wants More Client Names From UBS
FEBRUARY 20, 2009
Wall Street Journal
The Justice Department sued UBS AG to obtain access to 52,000 accounts belonging to U.S. clients -- some 30,000 more than previously known -- a day after reaching an agreement to settle a criminal investigation that called for the Swiss bank to turn over 250 accounts in a wide-ranging tax-evasion probe.
"The Department of Justice is committed to do all that it can to aid the [Internal Revenue Service] in locating those who would seek to hide behind secret accounts and in holding them accountable under the federal tax laws," Mr. DiCicco said.
A new IRS document also details secret transaction codes used by one UBS manager to shroud client information -- for example, using the word "swan" to denote a $1 million transaction.
UBS now faces the difficult task of convincing clients it can keep their account information confidential, even as it now tries to fight an effort to turn over the 52,000 accounts. UBS client bankers used a range of ways to hide U.S. accounts and transactions, according to court documents. In a new disclosure, an IRS official said in a court document that one UBS money manager used an elaborate code: The color orange referred to euros while green stood for dollars. A $250,000 transaction was referred to as a "nut."
On Wednesday, as part of the Justice Department's settlement with UBS, the government said UBS had in the range of 20,000 U.S. "clients" with assets of about $20 billion. But Thursday, an IRS investigator said in a sworn court declaration that he had discovered an internal document from 2004 stating that the bank had some 52,000 secret American account holders with assets of around $15 billion.
On Wednesday and Thursday, Swiss bank representatives took pains to explain that the 250 names were a special case because suspected tax fraud was involved. Swiss authorities, seeking to calm nervous Swiss bank clients, draw a narrow distinction between tax fraud -- which allows the lifting of bank secrecy rules -- and cases of tax evasion, which don't.
