The Justice Department issued a statement today shooting down a New York Times report that the U.S. is considering dropping its tax enforcement case against Swiss bank UBS AG.
“There is no basis for the report in the New York Times,” DOJ spokesman Charles Miller said in the statement. “While the Department is always willing to consider settlement in any case, the suggestion that the Department is planning to drop this suit is simply untrue. The Department is continuing with the case against UBS and will file its brief asking the court to enforce the summons on June 30.”
The U.S. wants the Swiss bank to cough up the names of 52,000 Americans who may have used UBS to evade taxes by putting money in overseas accounts. Naturally, this effort has caused a huge diplomatic row. The U.S. is taking direct aim at Swiss banking secrecy laws – and if your Swiss bank account isn’t secret, Switzerland ain’t much use as a tax haven, is it?
So you see the problem here.
The Times reported that the move to drop the case could be made by mid-July, which would fall right after the June 30 I.R.S. deadline requiring clients of offshore banks to file certain disclosures, known as F-bars. The U.S. official told the Times:
“If you look at the repatriations and F-bar filings and voluntary disclosures, and if these are big numbers, then it would make sense to settle this case.”
Many wealthy UBS account holders have already come forward recently to declare their accounts out of fear that they would be outed anyways. According to the official, the rationale in dropping the case is that:
“To have a complete meltdown in Swiss-U.S. relations and go to the mat with Switzerland three years from now when money is getting back into the system doesn’t make sense,”
The Times also reports that a new treaty was established between the United States and Switzerland to fight tax evasion by increasing information sharing. The DOJ has also filed legal papers in Swiss courts as an alternate avenue to getting names of Americans hiding money in UBS accounts. The Swiss government is considering a compromise where the charges in the United States are dropped while the Swiss government complies with the Swiss-based filings.
A trial is scheduled before Federal Judge Alan S. Gold of the United States District Court in Miami on July 13.
You can read our previous reports on the UBS case here, here, here, here, here, and here.
