On June 17, 2010, Swiss Parliament approved a Swiss-U.S. tax agreement that requires UBS AG to provide information to the IRS on 4,450 U.S. persons with undisclosed accounts at the Swiss bank. Parliament ratification of the UBS agreement came after the lower house of Swiss parliament backed away from requesting the matter be put to a national referendum, which would have caused Switzerland to miss an August 2010 deadline to disclose the information to IRS. “Parliamentary approval means that nothing now stands in the way of UBS client details being disclosed,” the Swiss Justice Ministry said. IRS Commissioner Doug Shulman said he expected the Swiss authorities to move swiftly to deliver the account information to the IRS.
Many UBS clients have taken advantage of the IRS Offshore Voluntary Disclosure program, which allowed taxpayers with offshore accounts to come forward and disclose their accounts and any unreported income to the IRS in exchange of a promise not to be prosecuted criminally and a reduced 20% penalty for the failure to file Foreign Bank Account Reports. That program expired on October 15, 2009, however, a long-standing voluntary disclosure policy of the IRS is still in effect and allows those taxpayers who come forward voluntarily to still avoid criminal prosecution. Taxpayers with UBS accounts who may have been relying on the Swiss courts to prevent UBS from disclosing their names to the IRS may rethink their strategy now and take advantage of the IRS voluntary disclosure program.
Copyright (c) 2010 Igor S. Drabkin. All Rights Reserved.