The Swiss Parliament has rejected the tax deal between the United States and Switzerland over disclosing the account information of 4,450 U.S. clients of Swiss banking giant UBS, according to several news outlets.
The lower house of the Swiss Parliament voted on Tuesday to reject the agreement that was designed to allow UBS [UBS] to avoid tax evasion charges. The agreement had already been passed by the Swiss Parliament’s upper house. According to Marketwatch, which quoted Swiss media reports, the lower house voted down the measure 104 to 76. Marketwatch also noted that a Swiss court had previously ruled that UBS couldn’t give the information to U.S. authorities without the approval of the Swiss government.
A UBS spokeswoman declined to comment on the reports.
Last August, UBS agreed to hand over information on 4,450 client accounts in order to settle the lawsuit brought by the U.S. over alleged tax evasion. That pact came after a deferred prosecution agreement in February 2009, in which the UBS agreed to pay $780 million in fines and restitution as well as hand over the names of more than 300 clients involved in alleged evasion of U.S. taxes.
As part of the August agreement, the U.S. government submitted a treaty request to the Swiss government asking for details on specific accounts. Under the terms of the treaty, the Swiss government would have told UBS to turn over the information. The IRS would have received information on accounts of various sizes and types, including bank-only accounts, custody accounts in which securities or other investments were held and offshore company nominee accounts that allowed an individual to indirectly hold beneficial ownership in the accounts.
The IRS has said that it would recommend criminal prosecution of account holders “where the facts warrant it.” Criminal charges, including guilty pleas and monetary penalties, have resulted for a few former UBS clients—but not against the Swiss firm.
In addition, the IRS created a related special voluntary disclosure program, which ended last October. The agency said that approximately 15,000 individual applicants made timely disclosures and more than 97% of applicants who filed on time were accepted into the program. The IRS also said that the information it received from those disclosures would form the basis of ongoing investigations into promoters and institutions that aid tax evasion.
UBS, on its website in a section devoted to the tax issue, states that it “has consistently supported a positive vote in the Swiss Parliament.” The deal, the firm states: “would allow the Swiss government to meet its obligations under the US-Swiss government agreement. But even if Parliament votes against the Agreement, postpones the vote or refers it to the Swiss people as a referendum, UBS would expect ongoing discussions between the US and Swiss governments regarding a resolution of the issue.”