The Internal Revenue Service announced Tuesday it has withdrawn the John Doe Summons in the UBS AG scandal in which the U.S. demanded that the company hand over the names of Americans with secret offshore accounts.
“We are taking this action in light of our success in obtaining the account holder information we sought through the summons and obtained under the August 2009 agreement with the Swiss government and UBS,” IRS Commissioner Doug Shulman said Tuesday in a press statement. “We appreciate the help and assistance of the Swiss government and UBS during this process.”
He added: “Not only are we breaking through the walls of international bank secrecy, we are producing real results for U.S. taxpayers . . .The John Doe Summons in the UBS case was just one piece of a much larger effort underway here at the IRS on international issues.”
As a result of the case and the globalization of the agency’s responsibilities, the IRS has renamed its large corporate division to the Large Business and International Division.
Shulman added that there are now more than 18,000 people who have made voluntary disclosures of offshore funds. “We are finding that many of these voluntary disclosure cases involve significant amounts of previously unpaid tax,” he said. “Account sizes and taxes vary considerably from case to case, but the closed cases so far have averaged more than $200,000 in tax collections per case, which includes back taxes, interest and penalties.”
As part of the UBS AG agreement between the United States and Switzerland reached in August 2009, the IRS has received approximately 4,000 UBS treaty-request accounts so far. More are expected after appeals have been decided by the Swiss Federal Administrative Court,” Shulman said. “These UBS treaty request account holders face a full-blown audit—and potentially more, depending on the circumstances—unless they came in through the voluntary disclosure program first.”
The IRS expects the final count of UBS AG accounts received from various sources to exceed 7,500, the IRS stated. “Although more data mining is still to be done,” Shulman added in his statement, “this information has already proved invaluable in supplementing and corroborating prior leads, as well as developing new leads, involving numerous banks, advisors and promoters from around the world. And this remains just the start. As I have said from the beginning, this has never been about one bank or one country. . . We have additional cases and banks in our sights right now. This issue is not going away, and those who try to skirt U.S. tax laws by hiding assets and income offshore, and the banks and advisors who help them do it, will find themselves increasingly at risk due to our efforts in this area.
Authorities in the United States began investigating UBS in 2008. In May 2008, federal prosecutors indicted Bradley Birkenfeld, a former senior UBS banker, over his role in an illegal tax scheme that enabled a U.S. client to avoid paying U.S. taxes on assets maintained at UBS in Switzerland. He pleaded guilty one month later to conspiring to defraud the IRS by assisting UBS clients in avoiding US reporting requirements on income in Swiss bank accounts. According to Birkenfeld's court statement, UBS employees helped wealthy U.S. clients conceal their ownership of assets held offshore by creating sham entities and then filing IRS forms falsely, claiming that the entities were the owners of the accounts.