UBS: Where will the other 5,550 names come from?

By Felix Salmon
August 19, 2009
reported by the WSJ, don't make a lot of sense to me:

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The UBS numbers, as reported by the WSJ, don’t make a lot of sense to me:

UBS AG will hand over some 4,450 names of U.S. account holders as part of a U.S.-Swiss tax-evasion settlement and investigation that could produce in total 10,000 account identities, according to people familiar with the situation…

Aside from the account identities being turned over by UBS, some 5,000 names are expected to be produced through a special IRS amnesty program where UBS clients acknowledge unpaid income tax.

How is this IRS amnesty supposed to work? I was under the impression that they’ve tried this already: “if you fess up now, before we get our list of 4,450 names, and you’re on the list, then we won’t hit you with massive penalties — but if you don’t fess up and you’re on the list, then we’ll be much harsher”.

But 4,450 is a lower number than expected, and I’m pretty sure that substantially all of UBS’s clients will opt to take their chances rather than voluntarily going to the IRS. If they get caught, then so be it. But if they don’t, they’re basically home free: after all this back-and-forth, no one has any appetite to go through the whole thing all over again.

Indeed, there’s a possible upside to this whole affair for UBS: if I were a private-banking client of a major Swiss bank which wasn’t UBS, I’d be inclined to move my funds to UBS right now just on the grounds that lightning is most unlikely to strike twice. Not that UBS has any interest in condoning US tax-evasion any more, of course. Oh no.


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Dear Felix
UBS is (like many other Swiss Banks recently – the number is increasing) not willing to accept any new clients with US-Passport oder Greencard.

All US taxpayers holding accounts overseas are required to file form TDF 90-22 yearly to report those holdings. In the last year or two, enforcement of what used to be a formality has turned quite draconian, as failure to declare an account incurs stiff penalties, whether the account is legit or not. This will probably be the mechanism used to go after the UBS account holders, as the burden of proof is much lower – they don’t need to prove actual tax evasion or money laundering was going on, just that a foreign account was not declared.

Every American is supposed to pay their fair share of taxes. The government has been asleep at the wheel far too long to allow these wealthy Americans to get away with this BS. Im tired of these ultra wealthy people who believe somehow they are above the law while others pay their fair share of taxes. Tar and Feather, their should be no slap on the wrist for these who short the system! Furthermore what are these wealthy individuals doing to put people back to work, especially in these of song bird times that all these financial houses are crying the swan song while CEOS of these financial houses walk off with absurd amounts. Investors wake up, you put money into these places, some might gain, but others have lost much. I for one will not put any money into the stock market or other financial houses until sanity it brought back to them.

Posted by William | Report as abusive

Actually, you wouldn’t move to UBS or any other Swiss bank if you were hiding money because they would require disclosure at the time of account setup if you were American. You would also be pretty skittish if you were from any other country as well given that a precedent has been set.

Also, for all the talk about tax cheats, there are plenty of legitimate people with accounts who are possibly affected. People who lived and worked in developing countries (like me) where there was no presence of American banks, I never trusted the local banks but UBS had a presence in those countries so it was a safe place to park some money. Other reasons might include simple privacy. You paid the tax on the money but didn’t want your future ex-wife or husband to get a hold of it. Sure, it might be just as sleazy, but its not a tax issue. Finally you have lots of holocaust survivors and their heirs. My grandfather once told me if I was smart I should hide some money in a safe bank in a safe country just in case public sentiment turns against jews (again) which given history, isn’t such a far fetched idea.

So sure, every American is suppose to pay tax (even if our tax system is ass backwards messed up and getting worse thanks to Obama) but there’s a lot of reasons to have an overseas account and not disclose it and tax is just one of them, let’s not be naive here gang.

Posted by Worker Bee | Report as abusive

Mr. Salmon, I disagree with your premise that if an American with a non-compliant UBS account is not on the list, he might take his chances and may be “home free”.
For one thing, UBS no longer wants US clients and existing US clients have been asked to take their funds elsewhere. Supposing that the client now goes to Bank #2, in whatever jurisdiction (Switzerland or elsewhere), Bank #2 may be investigated next. Also, “John Doe” summonses have been upheld by courts, and the IRS would be free to issue one to any foreign bank. Further, any attempt by the American to access the offshore funds would also have a trail. A wire transfer may give rise to a SAR (Suspicious Activities Report). A routine audit could even alert the IRS to foreign assets. Thus, even if the American is not on the UBS list, that person would still be at serious risk of discovery of that foreign account.

A Swiss account is soooo yesterday.

Even if the tax evasion succeed, good luck with inflation evasion.

Posted by Dan | Report as abusive

I have worked with UBS in the U.S. for years and no one has ever even suggested putting money in a foreign account. Stated differently, UBS has a legitimate U.S. business that has nothing to do with tax evasion.

By way of contrast, I have also worked with KPMG…

Posted by Peter Schaeffer | Report as abusive

It’s time for the middle class to ride the coat tails of the wealthy for a change.

Posted by Arrgy | Report as abusive

UBS has betrayed the trust of it’s account holders by handing over names. Imagine a doctor who hides his wealth in Switzerland to keep a nest egg in case he is hit with a massive lawsuit. Imagine a businessman who does the same in order to avoid parting with half his wealth from his viper ex-wife who was a nobody before she married him. The US Government should keep this list top-secret and pursue the matter confidentially like the way India has done when the LGT Bank names were leaked. India never revealed the names of the LGT Bank account holders and instead asked them to pay the tax discreetly.

Posted by Naresh | Report as abusive

Aren’t numbered accounts exempt/grandfathered from 2003 agreement between Swiss and US that requires the Swiss to disclose all US account holder of Swiss accounts information (I would assume the agreement applies to accounts open after the agreement was signed)?

Why is the current audit of Swiss accounts only 6 yrs instead of the usual 10 or the entire life of the account? Why aren’t they asking for information prior to 2003? Are the Swiss banks unwilling to disclose, does the IRS/US government not have legal access to information prior to 2003?

Posted by nom | Report as abusive

Looks like US government is desperately trying to get money anyway they can even if it means asking a foreign bank to break it’s own country’s laws!

A-lot of people who will “outed” by this audit will be small, local business owners who employ locals. This will have a huge, negative impact on those small, local biz owners forcing some of them out of retirement, into bankruptcy, working for someone for minimum wage instead of being a biz owner.

I wish the US government would “go after” the BIG criminals like Wall Street, financial firms, banks but this would bring down the US economy.

Posted by nom | Report as abusive