UBS Offshore Bank Account Hearing Delayed
The hearing on the John Doe summons enforcement case brought by the IRS to obtain the names of 52,000 UBS clients who may have committed tax fraud through the use of offshore financial accounts has been delayed. The key phrase is MAY have committed tax fraud. Generally, under the terms of the existing treaty with Switzerland, the IRS must have evidence of tax fraud or tax evasion before the Swiss will turn over offshore bank account information. The IRS currently lacks the necessary information.
The hearing which was scheduled to begin on Monday was postponed based upon a joint request by the IRS and UBS in order to give them more time to negotiate a resolution. A status conference has been set for July 29th.
The IRS announced on Sunday that any settlement would require that UBS turn over the information on a “significant number” of individuals with Swiss bank accounts at UBS. According to an article in Timesonline by Christine Seib, there was speculation the IRS would insist on between 7,000 and 19,000 names.
As my readers know, persons subject to U.S. jurisdiction with signature authority over, or a financial interest in, an offshore financial account must report that offshore financial account to the IRS on TD F 90-22.1 Foreign Bank Account Report (FBAR) form.
The key question that remains is whether the announcement suggests that individuals with secret foreign bank accounts should take advantage of the current tax amnesty, or continue to hope that UBS will not be forced to turn over the names.
Given the potential for criminal tax penalties, as well as civil penalties for tax fraud; not to mention an FBAR penalty of 50% of the balance in an offshore bank account, this question can only be answered after consultation with a knowledgeable tax attorney who knows all the facts of your case.
If you would like a consultation with a tax litigation attorney at the Brager Tax Law Group, please give us a call.
