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Swiss legislature clears the way for UBS to disclose U.S. client’s names and account information to the Internal Revenue Service

After months of litigation between the Internal Revenue Service (IRS) and UBS on foreign bank accounts, and as well months of debate with Switzerland’s House of Parliament, the Swiss government has finally agreed and the parliament has consented to turning over thousands of alleged tax evaders to the Internal Revenue Service. The present agreement will call for UBS to turn over 4,450 American identifications that hold Swiss bank accounts. It should be noted that IRS has already received approximately 15,000 voluntary disclosures in a recently completed special voluntary disclosure program. However, many UBS clients and clients of various other tax haven countries are still waiting on the sidelines to determine what action they should take on their undisclosed foreign accounts.

This action by the Swiss government is a major turning point in removing bank secrecy as we have all known it in the past. This is also a major alert to those sitting on the sidelines that have not chosen to make any type of voluntary disclosure to the Internal Revenue Service to rectify their non compliance.

With the 4,450 UBS account holder names and information turned over to IRS, there stands to be over $2 million dollars in penalties on every million dollar foreign account hidden for the last six years. In addition, those account holders could face up to a maximum of five years in prison for the criminal tax evasion charges. These costs are in addition to any income tax and penalties on the underpayment of income tax that may have occurred by the income not being properly reported relating to these foreign accounts.

In the last two years we have seen many clients regarding their foreign accounts and many of those clients have chosen to proceed with some form of voluntary disclosure to the Internal Revenue Service. We have successfully represented these clients in avoiding any criminal charges, minimizing penalties on foreign bank accounts and eliminating penalties on various information documents that were required to be filed, as well as reducing the penalties on unreported income.

However, during meetings we have held with potential clients, many have chosen to not follow through with any type of disclosure and they are at this time exposed to a great deal of risk.

Many of you personally know me and have worked with our firm in the past. We are a boutique CPA firm in Clearwater, Florida that has been representing clients before the Internal Revenue Service for over 30 years. I am a former executive with the Internal Revenue Service and my partner, Eric Schmitz, is a former revenue agent with the Internal Revenue Service. During our tenure with the firm, we have represented hundreds of clients with foreign bank account disclosure problems and unreported income related to those accounts.

Through the years we have developed a team of attorneys that work very closely with our firm depending on the needs of the client to make sure we maintain client-attorney privilege and hence we provide the very best in legal and tax advice to the client through this team effort. If you have clients, associates or friends who have this problem, I urge you to contact our office to arrange for a consultation so that we may provide guidance and assistance.

This is a very complicated process and we have seen many mistakes being made in recent months by practitioners who are not totally familiar with the process and also, by clients who attempted to go this route alone. In the current environment, the process is even more difficult because IRS has changed the rules from the previous disclosure program.

Again, if we can be of assistance please do not hesitate to contact me, Eric Schmitz or call my assistant Barbara Smith at (727) 791-7879 or via email at whsimon@whsimon-cpas.com.  I look forward to hearing from you.
 

 
 

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