Terms of UBS Agreement Offer Insight Into U.S. Tax Evasion Campaign

Posted in Offshore Account Update, UBS / HSBC on December 9, 2009 | Share

The government has finally given us a glimpse at its blueprint for chasing suspected tax evaders.  On November 17, the IRS announced the terms of the Deferred Prosecution Agreement (DPA) with UBS AG detailing the criteria for determining which accountholders UBS will turn over to the U.S. government.

Ever since we learned that UBS agreed to disclose the names of its (until now) secret account holders to the IRS, we have been wondering how UBS would determine whom to turn in.  Well, now we know.  We will address the criteria in separate blog entries and articles, but, in general, accounthoders who have accounts with as little as CHF 250,000 and/or CHF 100,000 in annual income are on the list.

Perhaps more importantly, however, we now have an idea of the criteria the IRS and DOJ will use in pursuing similar agreements with other banks.  According to IRS Commissioner Douglas Shulman, the IRS now has information on over 70 foreign banks thanks to its Offshore Account Voluntary Disclosure Program. 

The UBS prosecution has motivated many foreign banks to “voluntarily” come forward and privately seek agreements with the U.S. – i.e., before the DOJ brings a damaging public law suit à la UBS.  These quietly negotiated agreements will either remain confidential or will receive much less fanfare than the UBS agreement.  Thus, the terms in the UBS DPA are, for now, our best insight into the IRS and DOJ’s ongoing campaign to pursue suspected international tax evasion.

We will continue to monitor these developments, and will comment on the DPA terms in upcoming blogs.  In the meantime, it is still not too late to make a voluntary disclosure if you have an undisclosed foreign account.  It is far better to come forward and identify yourself to the IRS than to have the IRS find out about you from someone else.

Thorn Law Group

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