Wednesday, August 12, 2009

US, Swiss Cement Deal On Secret UBS Bank Accounts

From Huffington

The Swiss and U.S. governments announced a deal Wednesday to settle American demands for the identities of suspected tax dodgers, despite Switzerland's vaunted bank secrecy. However, they kept all details under wraps, including how many of the 52,000 names sought by the IRS from banking giant UBS AG will be revealed.

Depending on the scale of the deal, it could be a new blow to Switzerland's reputation as a safe place to hide assets from the taxman back home.

Switzerland has long been under pressure from European neighbors and the U.S. to open its bank records for foreign tax authorities. The IRS case against UBS has been partly credited with pushing the Swiss government to agree in March to comply with tax investigation rules from the 30-nation Organization for Economic Cooperation and Development. UBS earlier this year named about 300 American clients in a separate case.

William Sharp, a Florida tax lawyer who represents American UBS clients, said he expects the agreement to allow Swiss authorities to interpret bank secrecy laws more broadly and allow a "substantial handover" of names.

"I would guess that the U.S. would not enter into this agreement in the absence of a major fine and penalty without having at least several hundred if not thousands of names turned over," Sharp said.

The IRS in February asked U.S. District Judge Alan S. Gold in Miami to force Zurich-based UBS to turn over names of some 52,000 American clients believed to be hiding nearly $15 billion in assets in secret accounts. UBS and the Swiss government had resisted, arguing that to do so would violate Swiss banking confidentiality laws that date back centuries.

The Swiss and U.S. governments announced in late July they had agreed in principle on major issues but released no details. They had hoped to present a final deal at a hearing Aug. 7, but resolving the differences took longer.

On Wednesday, lawyers for the U.S. and UBS told the judge in a brief conference call they had sealed the deal.

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