Second IRS Lawsuit Against UBS Filed as Settlement Ink Dries

by Tina Kells | February 19, 2009 at 11:47 am

653 views | 3 Recommendations | 0 comments

The ink on the landmark settlement between the US government and UBS isn't even dry yet and the IRS has already filed another lawsuit asking for access to information about American Swiss bank account holders.

The earlier settlement will give the IRS access to the identities of between 250 and 300 American account holders who the government believes have used Swiss bank accounts to hide money and evade taxes.

Under Swiss privacy laws the UBS can only be compelled to turn over banking details if there is a criminal tax conviction already in place. The Swiss do not turn over information when tax evasion is suspected but not yet proven.

The new lawsuit seeks to expand the terms under which UBS can be forced to turn over information about account holders as well as increase the scope of information given to include interest earned on hidden deposits and transaction details.

If successful the second suit could force UBS to reveal banking details of as many as 52,000 American account holders.

According to the lawsuit, as many as 52,000 U.S. customers hid their UBS accounts from the government in violation of tax laws, the department said.

The government said in the suit that of those 52,000 secret accounts, about 20,000 contained securities and about 32,000 contained cash. According to a UBS document filed with the lawsuit, as of the mid-2000s, those secret accounts held about $14.8 billion in assets.

According to court documents, U.S. citizens failed to report and pay U.S. income taxes on income earned in those secret accounts.

The lawsuit also alleged that UBS helped hundreds of U.S. taxpayers set up dummy offshore companies, to make it easier for those taxpayers to avoid their reporting obligations under U.S. tax laws.