Tax Blog and News

U.S. and Switzerland Sign Protocol to UBS Treaty

On March 31, 2010, the U.S. and Switzerland signed a protocol to the 2009 agreement that called on Switzerland to provide administrative assistance under Article 26 (Exchange of information) of the Switzerland-U.S. income tax treaty regarding information on the U.S. clients of UBS (UBS Agreement). Although the terms of the protocol were not provided to the public, the Swiss Federal Council said that the revised UBS Agreement created the necessary legal basis for the Switzerland’s tax administration to issue final decisions on “cases regarding continued and serious tax evasion” and permitted Switzerland to comply with its obligations to the U.S. as required under international law.

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IRS is Likely to Look at HSBC Accounts

If the HSBC information is provided to the U.S., the IRS would gain valuable insight from reviewing the data. It would see what types of accounts were held, in what regions, and how HSBC’s Swiss banking operation worked. About 15,000 U.S. taxpayers with offshore accounts came forward under a voluntary amnesty program last year, giving authorities a trove of information with which to hunt. All this information is likely to give the IRS and the DOJ new leads for its continued efforts to go after offshore tax cheats.

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Will the IRS Use Stolen Information to Prosecute Tax Evaders?

Theft of Tax Data May Help U.S. Fight Tax Evasion

The next step in the IRS fight against offshore tax evasion may lead to the government’s use of stolen data. Tax data thefts at HSBC in Switzerland and other offshore banks are leading more whistleblowers to come forward to U.S. tax authorities, Kevin Downing, a top Department of Justice prosecutor said on March 5, 2010.

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Switzerland Suggest a Solution to UBS Stalemate

Switzerland will ask Parliament to turn a UBS deal with the U.S. (which provided for disclosure of 4,450 accounts and got UBS off the hook in a John Doe Summons case) into binding law. That would plug a legal hole that is stopping Berne from honoring the agreement. Our readers may recall that UBS and the Swiss government agreed in August of 2009 to disclose 4,450 secret accounts belonging to U.S. citizens. The settlement, however, hit a stumbling block after a Swiss court ruled in January of this year that such a transfer of data would breach existing Swiss law.

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Igor Drabkin to Speak at Pepperdine University School of Law

On March 5, 2010, Igor Drabkin will be one of the speakers at a symposium called “Changing Face of Foreign Asset Protection” at Pepperdine University School of Law in Malibu, California. The symposium is sponsored by the Journal of Business, Entrepreneurship, and the Law (“JBEL”). Igor will be discussing IRS enforcement with respect to offshore financial activities, incluing the recent UBS case and the Offshore Voluntary Disclosure Program.

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IRS is About to Begin Detailed Employment Tax Audits

National Research Program (NRP) study on employment taxes will begin at the end of the month. The IRS will randomly select 2,000 taxpayers for employment tax examinations each year for the next three years. The examinations will be comprehensive in scope. Records pertaining to employment tax returns and issues will be subject to review during the examinations.

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Swiss Court Decision Puts Doubts Over UBS Deal

The January 22nd decision casts doubt on whether Switzerland could hand over the accounts of people who did not give proper documentation, but did not act fraudulently. Nevertheless, U.S. tax authorities said they expect the Swiss to honor the terms of that deal. The Swiss cabinet is supposed to discuss this week how to ensure the implementation of the Swiss-U.S. tax agreement following the court’s decision, it said in a statement. UBS said it had taken notice of the court’s decision but did not comment further.

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Former IRS Tax Attorneys
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Los Angeles, CA 90024

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