The U.S. Department of Justice recently dismissed a milestone criminal case against UBS, the Swiss-based bank that admitted to aiding U.S. citizens evade taxes on over 17,000 accounts.
The case was dismissed-as negotiated-when UBS signed an 18-month probation agreement to hand over data on 4,500 accounts and pay a fine of $780 million. Douglas Shulman, IRS commissioner, believes that the IRS may receive 7,000 names from UBS when deliberations with the bank cease. Since the agreement, signed in February 2009, the Justice Department has charged 17 American UBS clients, two UBS bankers and three others accused of aiding tax evaders. Approximately, 150 other individuals are currently under investigation by the IRS.
The IRS probe into UBS escalated in 2007, when Bradley Birkenfeld, a private banker, told U.S. law enforcement about how he and his colleagues came to the United States to recruit new clients with deep pockets. He also stated that UBS bankers helped the clients, collectively worth almost $20 billion, to avoid paying the IRS. Birkenfeld is now serving a 40-month prison term for his actions.
The 18-month probation agreement with UBS coincided with a voluntary disclosure period during which other banks could turn over data on tax evasion activity with immunity from prosecution. Commissioner Shulman claims that 20,000 accounts have been voluntarily submitted to the IRS for review, including accounts held at UBS, Credit Suisse, HSBC and other foreign banks.
Shulman says that the IRS may again pursue UBS via a civil case for the release of another 52,000 accounts. There may also be another voluntary disclosure period, but it will not include immunity from prosecution.