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Is UBS About to Name Names?

July 30, 2009 · 3 comments

Rumors have been swirling for months that a settlement between UBS and the Justice Department would be announced in mid-July. Specifically, The New York Times had implied that the feds were backing off demands for the Swiss bank to release the names of more than 50,000 Americans with secret accounts.

The idea that no names would be produced was bolstered earlier in the month when the Swiss government announced that turning over those records would be a violation of Swiss law. The Swiss government claimed that it would seize financial records from UBS before it would allow the bank to turn the names over to the US government.

However, this week, an attorney Eugene Stearns for UBS asked US District Judge Alan S. Gold for another conference, suggesting that a settlement was just “minutes away.”

Is he right? Or is this a delay tactic employed by attorneys for the bank in order to allow diplomatic talks between the countries to resolve the issue? Evidence would suggest the latter, since a meeting has been recently scheduled between Swiss and US heads of state to talk about the differences. Additionally, the IRS, through their attorneys, have asked the judge not to grant additional delays, which clearly implies that a settlement is not imminent.

As many US taxpayers with funds at UBS wait to see what happens, the IRS is reporting some success with their Voluntary Compliance Program. “Hundreds” of UBS clients have apparently come forward in an attempt to escape federal prosecution. The tens of thousands of clients whose names may be on the much sought after list have until September 23 to come forward. My guess is that the results of a negotiations next week (the deadline set by the judge) will affect how many taxpayers come forward on their own – and how many are offered up by UBS as a sacrifice.

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1 Ron Cohen July 31, 2009 at 11:53 am

It seems to me that the Voluntary Disclosure Program is failing at this point.

If there are 52K accounts at UBS, let’s say 1/4 have unreported offshore income. That’s 13K accounts. Over 3 months, that’s about 1,100 taxpayers per week. In the WSJ, they said about 400 disclosure cases had come in. And we know there are many, many more accounts in other banks besides UBS.

Perhaps they will all pile in in mid-September…but my first reaction is that 400 disclosures at this point is way, way below a good trend.

Further, the IRS appears to be swamped with just the 400 cases, per the WSJ. If thousands show up, it will be a complaince log-jam that will take them years to work through.

Ron

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