Death and Taxes: IRS Begins Procuring Offshore Client Accounts, Records from UBS
In what could be a significant development moving forward, UBS has provided the IRS with tax records and offshore accounts.
UBS Group AG has come to an understanding with the US Internal Revenue Service (IRS), following a disagreement over client accounts in Singapore that had alleged tax evasion. The latest round of talks between the two groups has resulted in an agreement by UBS to supply the IRS with tax records of Ching-Ye Hsiaw, an American client and US citizen living in China, part of the group’s bid to combat tax evasion, per a recent Bloomberg report.
The new world of online trading, fintech and marketing – register now for the Finance Magnates Tel Aviv Conference, June 29th 2016.
The case is noteworthy as it is one of the first to involve a high profile company, following the IRS’ recent ambitions to curb tax evasion abroad. Indeed, the IRS has ramped up efforts to eliminate tax havens for even basic individuals, which has extended to large corporations as well amidst widespread abuse and sheltering in international jurisdictions.
Following an IRS petition to a US federal judge in Florida, UBS ultimately relented and produced account records on Mr. Hsiaw, who owned a UBS account between 2001 and 2011. The records were procured due to the IRS’ need to reconcile his income tax liabilities from 2006 to 2011. The agreement and finality is noteworthy given that UBS, a private Swiss company, complied with the order, and handed over all records to the US Justice Department.
Switzerland has carved out a role in the international community, and notably in the US psyche as a tax haven for big business and wealthy individuals. Since 2008, the US has embarked on an ambitious plan to curb this practice, as well as clamping down on multiple Swiss banking groups for their roles in market misconduct, ranging from FX manipulation to LIBOR abuse.
It will be interesting to see if this case is the first of many, and how compliant UBS and others are with the IRS and other US entities. For its part, UBS has been cooperating fully with the US Justice Department.
According to Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division in a statement on the agreement: “The Department of Justice and the IRS are committed to making sure that offshore tax evasion is detected and dealt with appropriately. One critical component of that effort is making sure that the IRS has all of the information it needs to audit taxpayers with offshore assets.
