How UBS chooses the names it will give the IRS

By Felix Salmon
November 17, 2009
Lynnley Browning looks today at the 4,450 clients that UBS is going to give up to the IRS, going down the list of characteristics that UBS is going to look for when deciding which of its accounts to choose.

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Lynnley Browning looks today at the 4,450 clients that UBS is going to give up to the IRS, going down the list of characteristics that UBS is going to look for when deciding which of its accounts to choose.

What’s interesting is that it looks as though more than 10,000 UBS clients have already approached the IRS voluntarily. Clearly if client focus is UBS’s number-one priority (as all banks always say that it is), UBS will have every incentive to try to pick a subset of that group when it hands over the 4,450 names. And given how close UBS private bankers are to their clients, I’m sure that UBS knows which of its clients have chosen the voluntary-disclosure route.

There’s no obvious way that the US government can force UBS to give up a certain number of names the IRS doesn’t already have. After all, it can hardly complain if UBS told some of its clients that they were probably going to be given up anyway, so they should probably hand themselves in voluntarily.

But it will still be interesting to see whether UBS ends up handing over to the US government any information that the IRS hasn’t already been given voluntarily. My guess is that of the 4,450 names, only a tiny fraction will be unknown to the IRS at this point.

4 comments

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Eh, minor middlingburger. All the really really fat self-respecting parasites have their accounts in Panama and the like anyway.

But given the numbers of 10000 versus 4450, this also suggest that it might be in the interest of the US to drag out the negotiations (so that the uncertainty results in more people surrendering voluntarily), while UBS has an interest in getting this out of the way asap. So, let’s not hurry, let’s wait for a while, I would say.

Posted by TS | Report as abusive

If you’re going to report this anywhere, it would probably make sense to keep the distinction straight between UBS and the Swiss Federal Tax Administration, even though the NYT reporter didn’t.

Posted by dsquared | Report as abusive

Thank you for the insightful story. Although the press and the IRS are playing up on the story of rich and well-heeled tax dodgers, the majority of the offshore account holders are immigrants, who for obvious reasons, did not have tax-free 401k and IRA accounts to put their life savings into.

In the past, the IRS penalties for even reporting voluntarily were so harsh (i.e., no guaranty that the IRS still won’t bankrupt and throw you in jail), that many had no choice but to stay underground. With the recent voluntary disclosure, they had a way out, but only by coughing up a 40% penalty of their savings. In other countries, aside from paying back taxes and interest, the voluntary disclosure penalty is in Canada 0%, in Italy 5% and Great Britain 10%. But even with the U.S. government, where there is money involved, the morals and long term consequences get ignored.

References

1. http://www.lynamtax.co.uk/news/
2. http://www.tax-news.com/asp/story/Italy_ Launches_Tax_Amnesty_xxxx39110.html
3. http://www.cra-arc.gc.ca/gncy/nvstgtns/v dp-eng.html?=slnk
4. http://www.irs.gov/newsroom/article/0,,i d=104361,00.html

Posted by 4444fred | Report as abusive