So maybe it is a kindler, gentler IRS after all… The IRS has announced that it will drop its civil suit against the Swiss-based UBS, despite the fact that the bank is not technically in compliance with an existing agreement. In a show of not-so-totally surprising deference to the Swiss government, the IRS indicated that it was confident that the bank would follow through on its promise to deliver about 4,500 names to the IRS. So far, the bank has turned over about half of those names.

The IRS isn’t going *too* soft on us, though. It’s clear that while they are expecting UBS to honor the terms of the agreement, it is willing to take additional legal steps if the bank chooses not to follow through. But for now, there’s no longer a civil suit on the books. I’m guessing that banking officials at UBS may be having a little extra Eichhof tonight…

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Kelly Erb is a tax attorney and tax writer.

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