Igor S. Drabkin, J.D., Former IRS Attorney
On August 26, 2010, the Swiss government said it had reviewed approximately 4,450 UBS client accounts and that half of the data had already been handed over to the United States. Switzerland also said that it was optimistic that the U.S. would definitively withdraw legal action over tax fraud that threatened to bring down UBS, Switzerland’s largest bank. The U.S. government agreed in August 2009 to drop tax evasion charges against UBS when Switzerland agreed to coordinate the transfer account information on roughly 4,450 of American UBS clients. “Both parties are optimistic that the U.S. authorities will receive most of the agreed account information within a reasonable period of time and that the U.S. authorities will definitively withdraw the civil action (John Doe Summons) brought against UBS,” the ministry said. “The data delivery will be largely concluded by autumn 2010,” Switzerland said. The deal between UBS and U.S. was in limbo after the Swiss court ruled in January that UBS could not disclose account information to the United States. The uncertainty, however, was removed after Swiss parliament gave its support in June and ruled out a referendum on the issue.
With the news that UBS has begun disclosing account information to the U.S. authorities, it becomes an issue of timing for many U.S. taxpayers. The IRS has always had a policy of voluntary disclosure, which allowed taxpayers to voluntarily come forward and truthfully disclose unreported tax, and in exchange, avoid criminal prosecution. Such disclosure, however, is deemed timely only if it happens before the IRS has learned about the taxpayer and begun its own investigation of the taxpayer. Disclosure of the UBS accounts to the U.S. makes it critical for those taxpayers with undisclosed Swiss accounts to decide if they want to make a voluntary disclosure immediately.
Former IRS Tax Attorneys at Holtz Slavett & Drabkin are available to assist you with your offshore account tax issues and may be reached at (310) 550-6200.
Author: Igor S. Drabkin, J.D., Former IRS Attorney.
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