Internal Revenue Service Commissioner Doug Shulman said Tuesday the IRS has withdrawn its “John Doe” summonses against the Swiss bank UBS.
“We are taking this action in light of our success in obtaining the account holder information we sought through the summons and obtained under the August 2009 agreement with the Swiss government and UBS,” he said.
The U.S. and Swiss governments struck an agreement in August 2009 for UBS to provide the identities of 4,450 U.S. account holders at the bank (see UBS to Disclose 4,450 Bank Account Names). The IRS had been seeking the names of 52,000 accounts of suspects through John Doe summonses.
Under the agreement, the IRS would withdraw the remaining John Doe summonses on or after Jan. 1, 2010, once it had received the identities behind 10,000 UBS accounts. Those names could come from the Swiss government, UBS, or a voluntary disclosure program that the IRS offered to taxpayers last year. They would also include the 250 to 300 names that UBS turned over in February 2009 as part of a deferred prosecution agreement under which the bank agreed to pay $780 million to the Justice Department.
As part of the August 2009 agreement, the IRS has received approximately 4,000 UBS treaty-request accounts so far, according to Shulman. “We will get even more after the remaining account-holder appeals have been decided by the Swiss Federal Administrative Court,” he added. “These UBS treaty request account holders face a full-blown audit — and potentially more, depending on the circumstances — unless they came in through the voluntary disclosure program first.”
The IRS expects the final count of UBS AG accounts received from various sources to exceed 7,500, Shulman noted. That covers the entire spectrum, including accounts turned over outside the treaty request process under the February 2009 deferred prosecution agreement and the offshore voluntary disclosure program.
Approximately 15,000 taxpayers voluntarily disclosed their accounts at UBS and other foreign banks as part of the IRS’s voluntary disclosure program
“And these voluntary disclosures continue,” Shulman added. “Since the special program closed, we have received an additional 3,000 voluntary disclosures from individuals with bank accounts from around the world. This is a significant development to get this many people — now over 18,000 individuals and counting — back into our tax system.”
He noted that many of the voluntary disclosure cases involve significant amounts of previously unpaid taxes. “Account sizes and taxes vary considerably from case to case, but the closed cases so far have averaged more than $200,000 in tax collections per case, which includes back taxes, interest and penalties,” he said.
The IRS has taken additional steps to crack down on offshore tax avoidance. The agency has renamed and reshaped its large corporate division into the Large Business and International Division in order to further emphasize and specialize its international and offshore banking efforts, Shulman noted. The U.S. also continues to work closely with other governments through the Organization for Economic Cooperation and Development.
Shulman said the IRS has also been “scouring the vast quantity of data” it has received from the voluntary disclosure program and other sources. The IRS is doing data mining on the information and plans to do more to supplement and corroborate prior leads, as well as develop new leads, involving numerous banks, advisors and promoters from around the world.
“And this remains just the start,” said Shulman. “As I have said from the beginning, this has never been about one bank or one country. We’ve produced results and will continue to produce results.”
He emphasized that combating international tax evasion has been a top priority. “We have additional cases and banks in our sights right now,” he added. “This issue is not going away, and those who try to skirt U.S. tax laws by hiding assets and income offshore, and the banks and advisors who help them do it, will find themselves increasingly at risk due to our efforts in this area.”
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