IRS Commissioner Doug Shulman's Statement on UBS / Voluntary Disclosure Program

IRS Commissioner, Doug Shulman, gave his wrap up report on the UBS investigation and related Voluntary Disclosure Program. According to Shulman, during the Voluntary Disclosure Program, more than 15,000 taxpayers came forward; each case involved an average of $200,000 in unpaid taxes. Shulman also stated that the John Doe Summons that was issued to collect information from UBS has been withdrawn, since the IRS and Department of Justice have received all the information they were looking for. He also explains new changes in the agency's efforts to crack down on international tax compliance. You can find his full statement at IRS.gov.

Today, I’m pleased to announce the IRS has withdrawn the John Doe Summons in the UBS AG matter. We are taking this action in light of our success in obtaining the account holder information we sought through the summons and obtained under the August 2009 agreement with the Swiss government and UBS. We appreciate the help and assistance of the Swiss government and UBS during this process.

In addition, I’d especially like to thank the team at the U.S. Justice Department, for its tremendous work and support. We could not have done this without them. Working together, we were able to assure that the agreement was successfully implemented and the United States expectations under this landmark agreement were realized. We look forward to continued partnership with Justice as we continue our work.

Today’s announcement is yet another milestone in our ground-breaking efforts in the international tax compliance arena. Not only are we breaking through the walls of international bank secrecy, we are producing real results for U.S. taxpayers.

I can’t say this enough: When people cheat on their taxes, the vast majority of honest U.S. taxpayers suffer the consequences and have to make up the difference.

The John Doe Summons in the UBS case was just one piece of a much larger effort underway here at the IRS on international issues. There are many elements to it.

As part of our efforts, we have renamed and reshaped our large corporate division into the Large Business and International Division in order to further emphasize and specialize our international and offshore banking efforts. We also continue to work closely with other governments through the Organization for Economic Co-Operation and Development.

Today, I want to give you an update on our high-profile efforts that touch on our continuing offshore banking efforts.

First, here is an update on our offshore voluntary disclosure program:

We have had thousands more taxpayers come in through our voluntary disclosure program since our special program ended last year. We had approximately 15,000 voluntary disclosures from individuals who came in before the VDP program ended.

Continue reading at IRS.gov...

Tax Evaders Rush to Beat Amnesty Deadline

Now that the government has reached a settlement with UBS, American tax evaders have until September 23 to reveal their overseas holdings or risk serious legal troubles if their names appear on the list UBS is preparing to turn over to the IRS. If taxpayers do decide to turn themselves into the amnesty program, they will still need to pay a fine but will not face criminal prosecution.

The IRS expects to find some tax evaders soon. UBS AG, the Swiss banking giant, agreed to hand over to the IRS the names of about 4,450 secret accounts as part of a court settlement reached last month.

"This is sort of their last, best chance if they are going to get off with lenient treatment," said Evan Stewart, a regulatory lawyer at the firm Zuckerman Spaeder.

"If you're sitting there and you've sheltered $50 million from the U.S. government, are you willing to gamble with the (list of) 4,500 (names) and live in terror for a year?" Stewart said.

The IRS said that, in one week of July, about 400 individuals turned themselves in under the amnesty program. That was four times higher than the number of tax evaders who stepped forward in all of 2008, according to the agency.

Continue reading at Reuters.com…

IRS Corporate Audit Division Will Examine UBS Tax Evasion Cases

When the average taxpayer gets audited by the IRS, they usually get contacted by a regular IRS revenue office. However, this is not the case for those who are being audited as a result of the recent UBS settlement. According to Bloomberg.com, the IRS has created a new division for auditing wealthy Americans suspected of evading taxes offshore as part of an effort to get every dollar they are owed.

The tax agency posted internal job listings yesterday seeking auditors to work for a newly created office within its Large and Mid-Size Business division that will be tasked with monitoring what it called the “global high-wealth industry.”

The move centralizes responsibility for auditing wealthy individuals suspected of offshore tax evasion in a unit with the most experience navigating international tax treaties and untangling complex cross-border business structures.

“That’s where the most sophistication is at IRS,” said Michael Murphy, a former deputy IRS commissioner who is now a consultant for the law firm Sutherland Asbill & Brennan LLP in Washington.

Responsibility for auditing wealthy individuals is currently split among IRS divisions devoted to small businesses and self-employed wage earners and investors, which don’t have as much experience in cross-border transactions, Murphy said.

The IRS says it anticipates handling up to 10,000 new cases related to UBS, including thousands of people who come forward voluntarily in exchange for reduced penalties before Sept. 23.

Swiss Sell UBS AG Stocks, Tax Settlement Already Rewarding

As a result of the yesterday’s announcement that the names of over 4,500 Americans using bank accounts to avoid taxes would get turned over to the US government, Switzerland decided to let go of their UBS AG investments this morning. The sale earned the Swiss government an estimated $1.2 billion Francs – or about $1.1 billion in US currency.

The Swiss state sold 332.2 million shares to institutional investors at 16.50 francs each, the government said in a statement today. Including a 1.8 billion-franc cash payment the state is getting from UBS, the proceeds amount to about 7.2 billion francs.

The government bought 6 billion francs of UBS mandatory convertible notes last year to help the Zurich-based bank split off toxic assets amid the worst economic crisis since the Great Depression. The settlement of a U.S. lawsuit that sought data on 52,000 UBS clients and a 3.8 billion-franc capital increase in June strengthened confidence in the bank, the government said.

“The exit is a positive signal, as it shows the confidence of the Swiss government regarding the situation of UBS,” Stefan Schuermann, an analyst at Vontobel with a “hold” rating on the stock, said in a note. “The placement increases UBS’s flexibility in rebuilding its franchise and will help to keep or hire key employees.”

UBS rose 76 centimes, or 4.5 percent, to 17.50 francs in Swiss trading. UBS shares have risen 17 percent since the U.S. and Switzerland said they had reached an agreement in principle on the tax lawsuit on July 31.

Continued at Bloomberg.com…

Swiss to Reveal UBS Accounts to Settle U.S. Tax Fight

The legal battle between the U.S. and the Swiss looks like it may finally be coming to an end, according to a new Reuters.com story. As part of the deal, Switzerland has agreed to hand over 4,450 UBS AG bank accounts to U.S. authorities. This historic deal represents a new direction for IRS enforcement, and will likely result in millions of dollars in federal revenue.

With Switzerland's famed banking secrecy under fire, the Swiss have also agreed to process requests by the United States seeking information from its banks besides UBS about account holders who may have tried to evade U.S. taxes.

"This announcement today should send a signal - no matter what institution you're with, the IRS is willing to pursue both the institution and the individual," Internal Revenue Service Commissioner Doug Shulman told reporters on Wednesday.

The accounts were at one time worth $18 billion, Shulman said, though he could not provide a current figure.

U.S. authorities would not name any other foreign banks under probe but the IRS is expected to use the Swiss deal as a template to pursue further prosecutions.

"The IRS is now gaining institutional skill and knowledge in how to pursue these types of cases and they're going to use that. This is, I believe, the beginning and not the end," said Peter Hardy, a former federal prosecutor and specialist in white-collar crime at Post & Schell in Philadelphia.

UBS Tax Crackdown Widens to Hong Kong

Just weeks after reaching a settlement with the U.S. government, Switzerland’s largest bank UBS AG is running into even more problems. This time reports suggest that American taxpayers used illegal bank accounts and fake businesses in Hong Kong to avoid reporting their income. Check out the following story from the Wall Street Journal.

The U.S. crackdown on clients of UBS AG is widening into a global hunt, with the government detailing in court documents how the Swiss bank and outside advisers helped Americans hide money using enterprises set up in Hong Kong.

For the first time in the government's long-running bid to ferret out the names of U.S. tax-evaders from the Swiss bank's client list, plea agreements entered in the case are providing a clearer picture of UBS's sophisticated efforts to help Americans hide income or the existence of foreign bank accounts.

U.S. Tax Case Against UBS Grows Wider; Talks to Settle

From The Wall Street Journal:

UBS AG is under legal pressure as U.S. prosecutors expand their investigation into whether the Swiss bank helped tens of thousands of Americans avoid paying taxes, said several people involved in the case.

U.S. tax investigators believe the number of American clients that UBS helped to avoid taxes could be much higher than the previously disclosed estimate of about 17,000, these people said. The people said investigators are also looking into whether other parts of the bank besides the wealth-management unit were involved in helping clients avoid U.S. taxes.

The bank is in a round of talks with the Justice Department to avert a possible felony indictment by admitting to criminal conduct and paying a penalty in the range of $1.2 billion, these people said.

UBS has publicly denied any wrongdoing, and a bank spokesman said the bank "does not comment on...speculative matters." A Justice Department representative also declined to comment.

New UBS Chairman Peter Kurer has indicated that striking a deal with U.S. prosecutors is a top priority. In a Jan. 15 presentation for investors, he said goals for 2009 include a "DOJ settlement" and a "recovery of UBS's reputation."

UBS became the focus of U.S. criminal and civil probes into alleged offshore tax evasion in 2007, when a former UBS executive told U.S. officials that the bank allegedly began telling American customers in 2002 that it wasn't required to disclose their identities to the Internal Revenue Service.

Prosecutors in Florida have indicted one former high-level UBS executive on charges of helping Americans evade taxes and have detained a second executive as a material witness; Bradley Birkenfeld, the former UBS executive who tipped off U.S. officials, has pleaded guilty to the same charge and is helping the IRS and the Justice Department.

In the civil case, the Justice Department and the Internal Revenue Service are discussing whether to ask a federal judge for a new order to force the bank to turn over the names of its American account holders, people involved in the case said.

The IRS obtained a broad civil summons from the U.S. District Court for the Southern District of Florida in July 2008 to request UBS hand over the names of all of its American clients, but the bank has yet to do so. An IRS spokeswoman declined comment. The bank had no comment.