The US and Swiss governments and banking giant UBS AG indicated on Sunday that they were seeking a settlement and asked a federal judge to delay high-stakes hearings on the Internal Revenue Service’s (IRS) effort to identify thousands of suspected US tax evaders.
The one-page motion, filed in Miami less than 24 hours before the hearings were to begin yesterday, said postponement is needed “to allow the two governments to continue their discussions seeking a resolution of this matter.”
Unless a deal is reached beforehand, the filing asks that the hearing be rescheduled for Aug. 3.
US District Judge Alan Gold did not immediately rule on the request, but judges routinely allow parties in civil cases extra time to settle out of court.
In a statement, the US Justice Department said any agreement would have to require that UBS provide “information on a significant number of individuals with UBS accounts.”
“If an alternative resolution is not reached, the Department of Justice will continue to vigorously pursue enforcement of the summons through the court,” the statement said.
In Zurich, UBS welcomed the announcement that the US and Swiss governments had agreed to negotiations on resolving the litigation.
“This agreement has resulted in a joint motion by the US government and UBS, with the support of the Swiss government, for a stay of the litigation in Miami for a duration of 15 days in order to achieve a settlement,” UBS said in a statement.
The case seeking the identities of some 52,000 wealthy US clients suspected of hiding US$15 billion at UBS has already sent shock waves through the international banking system.
Bankers fear a ruling against UBS would disrupt cross-border commerce, force people to withdraw huge sums of money from financial entities with offshore offices and play havoc with international tax treaties.
Experts say some other foreign banks are asking US clients to close out accounts for fear they may be targeted next.
“The precedent this case may set is of immediate relevance to all financial institutions with global operations,” the Institute of International Bankers and other financial organizations said in a recent court filing.
The UBS case has persuaded hundreds of taxpayers with offshore accounts to come clean with the IRS under a voluntary disclosure program. The program allows most people to pay a fine and back taxes without facing criminal prosecution, said tax attorney Robert McKenzie with the Arnstein & Lehr firm.
“The IRS would like to continue the specter of fear that this UBS case has created,” McKenzie said. “This strategy is working. The level of calls I’m receiving is picking up, not going down.”
UBS, which previously admitted wrongdoing in a more limited US tax case, is resisting turning over the names that have been protected by centuries-old Swiss bank secrecy laws.
“Honoring the IRS summons would require UBS to violate Swiss criminal law, and we simply cannot comply,” said Oswald Gruebel, UBS chief executive officer, in a letter to bank offices worldwide. “This matter should be resolved between governments according to established frameworks.”
The Swiss government escalated the dispute last week by threatening to block release of the UBS account names if Gold rules for the IRS.
One of Europe’s biggest banks, UBS has about 34,000 permanent and contract employees at 381 locations in the US, the company said.
The IRS in February filed what are called “John Doe summonses” seeking US taxpayer identities from UBS, shortly after the Zurich-based bank reached a deferred prosecution agreement with the US Justice Department over its tax evasion practices. UBS agreed then to identify 300 people — some of whom are now facing criminal charges — and admitted it wrongly used sham offshore entities, false paperwork and questionable client recruitment.
UBS also paid a US$780 million penalty.
“Until its activities were discovered, UBS — on US soil — regularly violated US law and actively helped its customers violate US law,” said Justice Department tax attorney Stuart Gibson, the lead US lawyer on the case.
The 300 names were released under an exception to Swiss banking secrecy law when clients deliberately defrauded tax authorities, as opposed to failing to declare all assets.
Abusive tax shelters and hidden offshore accounts cost the US government an estimated US$100 billion a year in lost tax revenue, said Democratic Senator Carl Levin, chairman of the Senate Permanent Subcommittee on Investigations.
The Central Weather Administration (CWA) yesterday said it expected to issue a sea warning for Typhoon Fung-Wong tomorrow, which it said would possibly make landfall near central Taiwan. As of 2am yesterday, Fung-Wong was about 1,760km southeast of Oluanpi (鵝鑾鼻), Taiwan’s southernmost point, moving west-northwest at 26kph. It is forecast to reach Luzon in the northern Philippines by tomorrow, the CWA said. After entering the South China Sea, Typhoon Fung-Wong is likely to turn northward toward Taiwan, CWA forecaster Chang Chun-yao (張峻堯) said, adding that it would likely make landfall near central Taiwan. The CWA expects to issue a land
Taiwan’s exports soared to an all-time high of US$61.8 billion last month, surging 49.7 percent from a year earlier, as the global frenzy for artificial intelligence (AI) applications and new consumer electronics powered shipments of high-tech goods, the Ministry of Finance said yesterday. It was the first time exports had exceeded the US$60 billion mark, fueled by the global boom in AI development that has significantly boosted Taiwanese companies across the international supply chain, Department of Statistics Director-General Beatrice Tsai (蔡美娜) told a media briefing. “There is a consensus among major AI players that the upcycle is still in its early stage,”
The Central Weather Administration (CWA) yesterday said it is expected to issue a sea warning for Typhoon Fung-wong this afternoon and a land warning tomorrow. As of 1pm, the storm was about 1,070km southeast of Oluanpi (鵝鑾鼻), Taiwan’s southernmost point, and was moving west-northwest at 28 to 32kph, according to CWA data. The storm had a radius of 250km, with maximum sustained winds of 173kph and gusts reaching 209kph, the CWA added. The storm is forecast to pass near Luzon in the Philippines before entering the South China Sea and potentially turning northward toward Taiwan, the CWA said. CWA forecaster Chang Chun-yao (張峻堯) said
Japanese Prime Minister Sanae Takaichi yesterday said that China using armed force against Taiwan could constitute a "survival-threatening situation" for Japan, allowing the country to mobilize the Japanese armed forces under its security laws. Takaichi made the remarks during a parliamentary session while responding to a question about whether a "Taiwan contingency" involving a Chinese naval blockade would qualify as a "survival-threatening situation" for Japan, according to a report by Japan’s Asahi Shimbun. "If warships are used and other armed actions are involved, I believe this could constitute a survival-threatening situation," Takaichi was quoted as saying in the report. Under Japan’s security legislation,
RSS