Monday, June 30, 2008

IRS Attempting To Get Info From Swiss Bank On $20 Billion Worth of Hidden U.S. Taxpayer Accounts

This should get interesting.

The IRS suspects that UBS bank may have up to $20 billion worth of assets that are hidden there by U.S. taxpayers. The information comes from one Bradley C. Birkenfeld, a former UBS banker, who has been squeezed by the Feds and has entered a plea deal with the government.

Justice Department lawyers said late Monday that they had filed court documents in Miami asking a judge to allow the IRS to get information from UBS. U.S. investigators are seeking permission for the first time to serve what are called “John Doe” summons to obtain information about possible tax fraud against taxpayers whose identities are not known.

IRS agent, Daniel Reeves, said in a declaration filed with the summons request that Birkenfeld was one of 40 to 50 UBS bankers who traveled to the United States “on a quarterly basis to service U.S. taxpayers.” He also said that UBS employees traveled with “encrypted laptop computers containing clients’ portfolios.” UBS also made it appear as if non-United States taxpayers, rather than its American clients, owned the offshore accounts.

The Feds may have leverage against UBS in that UBS has significant assets in the United States, including UBS Securities, that can be fined or confiscated if UBS fails to comply.

John A. DiCicco, Deputy Assistant Attorney General for the Justice Departments Tax Division said in a statement:

We are working cooperatively with both the Swiss government and UBS to obtain this information. However, we are prepared to seek enforcement if that process is not successful.

Of course, with $20 billion in hidden assets at UBS, there are probably some major players who may have some influence at top government levels and who may attempt to squash the investigation.

Phil Gramm, who we just wrote about, a couple of hours ago before this story broke, is co-chairman of UBS Securities.

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