US Tax Authority Will Continue To Pressure UBS - Report

Rachel Walsh

26 February 2009

The US tax authority, the Internal Revenue Service, which has filed a lawsuit against Swiss bank UBS, will keep the pressure on offshore financial firms helping Americans avoid taxation, according to Reuters.

IRS Commissioner Douglas Shulman would not comment on the UBS case, but said the United States would pursue individuals and firms hiding money from taxation in secret offshore accounts.

"Clearly there have been some high profile cases in the news recently. We have been steadily increasing pressure on offshore financial institutions that facilitate concealment of taxable income in the US," he is reported to have said.

"That pressure will continue under my watch," Mr Shulman told a Tax Council Policy Institute conference on Wednesday.

The US government has sued UBS to obtain the names of thousands of American clients with accounts at the Swiss bank. The lawsuit, filed last week, came a day after UBS agreed to pay $780 million and identify some clients in a deal to resolve criminal fraud charges.

US authorities believe UBS has 52,000 undeclared accounts of American customers. The Swiss bank has vowed to fight the IRS lawsuit, saying the requested information is protected by Swiss privacy laws.

Mr Shulman urged Americans to use the IRS voluntary disclosure program that allows those hiding assets to report it to the tax agency "and most of the time" avoid criminal prosecution. "We encourage people to do so," he said.

The IRS and Treasury Department are examining "a wide range of options to address offshore tax abuses," Mr Shulman said, without providing any details.

UK tax official David Hartnett, director general of revenue and customs, said Britain was as determined as the United States to end secrecy on offshore accounts.

"All these secrecy centres have got an awful lot of data which is going to have to come forward," he told reporters at the tax policy conference.

"In my meetings with leaders of secrecy countries, the clear message today is we're not going away, we're going to become more and more determined, as the US showed in relation to UBS," Mr Hartnett said.

"Many of these countries are actually dependent on countries like the United States and the UK and others in various different ways, and so there are levers," he said.