This could be interesting:
The Justice Department and Swiss banking giant UBS have struck a tentative deal on IRS demands for the names of 52,000 wealthy American clients of the bank, lawyers for both sides said Friday.
“The parties have reached an agreement in principle on the major issues,” Stuart Gibson, a Justice Department tax division attorney, told U.S. District Judge Alan Gold during a morning phone conference.
Terms of the deal were not immediately announced. Gold said the parties would likely present a written breakdown at an Aug. 7 status conference, with a final agreement to be approved by the court three days later.
The announcement prompted Gold to cancel a key evidentiary hearing that had been scheduled for Monday on the closely watched tax standoff that has threatened to add new cracks to Switzerland’s historic reputation for banking secrecy.
I don’t know how you are supposed to maintain banking secrecy in a global economy.
Zifnab
Simple. Tell the foreign governments you’re hiding money from to stick their collective heads in the oven. Then, duck and cover.
Ron Beasley
Does this mean Phil Grahm won’t be going to jail?
Too bad!
Linkmeister
One hopes one of the most prominent names on that list is one of UBS’s directors, Phil Gramm, without whom this financial crisis might have been averted or at least reduced in size and scope.
Ugh
They need to throw the book at these people
Awesom0
Curious to see how this plays out here in Geneva (where I currently live). My experience has been that the Swiss take their banking secrecy laws as seriously as some Americans take their 2nd Amendment rights…they get pissed.
I’m not offering a defense of the Swiss on this, I’m just saying. When this story first broke, many of the Swiss papers ran graphics of an American flag (depicted as a saber) aimed at a map of Switzerland.
This should be fun to experience. The last time, I got a beer bottle thrown at my head by an overly zealous Swiss nationalist….
ThatLeftTurnInABQ
Running a global economy is not important. What is important is maintaining just enough secrecy to keep the general population in a permanent state of helpless paranoia and allow the History Channel to fill air time with never ending special features about “Secrets of the missing Nazi gold ! ! !“, (because otherwise they might have to do some actual work learning about actual history ‘n stuff).
MikeJ
The same people that don’t like the black sheep?
http://img.dailymail.co.uk/i/pix/2007/09_01/SwissSheepL_468x635.jpg
calipygian
I wonder how many of those names on the secret list of customers are “Bush” and “Cheney”?
Chuck Butcher
@calipygian: “Bush” and “Cheney”?
Or under the umbrella of “BushCo”
Face
I’d tell them to go fuck themselves as we enjoy our sandwiches with turkey and Freedom Cheese and keep time on our Freedom Watches.
Napoleon
@Face:
. . . or we will stab them with our Freedom Army Knives.
Foxhunter
@Face:
With the correct tempo, that reads like something spoken by a progressive reincarnation of Kenny Powers.
Thanks for the Friday laugh!!
Tsulagi
That whole thing is not going over well with the average Swiss man/woman on the streets. At least according to my SO’s BFF from her school days who now lives in Switzerland with her Swiss husband. She visited us for a few weeks recently.
She said they started off very happy Obama won the election, but now are pissed, in the calm Swiss kind of way. See him as using U.S. muscle intimidating a small country. That the Swiss economy, like that of a lot of other countries, is hurting and we’re threatening a major cornerstone of theirs. That if we win this action, other countries will line up to do the same, and at the end of the day all we’ll succeed in doing is chasing that money to other countries with banking secrecy.
Now you want to have a real exercise in communication, try getting all that from an Argentine woman speaking Swiss-style German. Still, it was much easier than trying to decipher Palin or Bush.
inkadu
Oh noes! What will Jason Bourne do with his ATM card now?
David Hunt
@Tsulagi:
“Still, it was much easier than trying to decipher Palin or Bush.”
All you need is to have access to William Shatner, a cellist, and a bongo-drummer. It sounds much better after that. It still doesn’t make any sense, but it does sound better.
liberal
@Tsulagi:
I might be wrong about this, but I thought the way to force all the money laundering countries out of business is to disconnect them from the international banking system.
I don’t know that there’s a sure-fire way to do this, but IIRC such actions were discussed a few years ago vis-a-vis some Carribean banks.
liberal
@Awesom0:
Poor, poor money launders and protectors of tax cheats!
Ugh
The US, EU, japan and other large nations need to band together and tell the swiss to stuff it and, if they don’t, impose sanctions. “Bank secrecy” my ass, doesn’t apply to swiss citizens
Tsulagi
@Awesom0:
Exactly. According to my wife’s friend they also see it as an issue of sovereignty and arrogance. As if we’re telling them they will be governed by our laws and court decisions.
BTW, when trying to comment on this thread I’ve been getting WordPress database error messages. Maybe just me, or it’s the usual crack BJ IT
Tsulagi
Another BTW, it would be nice to have the edit feature back.
EthylEster
Yes, the Swiss love their banking system with its anonymous accounts. (The second amendent is a good analogy.) IIRC there has already been one “agreement” on this matter and it proceeded to go nowhere. i think the same thing will happen here. i doubt the swiss will hand over the account info.
inkadu
The Swiss are not the ones who are going to effectively oppose this. No, the ones who will kill this action are the super-rich and super-powerful customers of swiss banks.
liberal
@Tsulagi:
Steve
I actually cross-examined a guy recently who had one of these accounts – a $700,000 Swiss bank account he never reported to the IRS. It’s so weird to see an account statement that doesn’t even have the account holder’s name on it – just a number.
The Swiss take their banking laws very seriously but last time I checked, the Americans take their tax laws pretty seriously. I wonder how UBS would like it if we said “fine, you can keep that information secret if you like, but you’re not welcome to do any more business in the US from now on.”
inkadu
@Ugh: I wonder if Swiss citizens themselves are allowed to hide their money from the Swiss government in Swiss banks. I doubt it.
jack fate
Just wondering. . . UBS is not an incorporated entity like Vandelay Industries, Inc.. It is a lending institution chartered/licensed by the concerned regulatory authorities. Yank their charter until they comply. We’re talking about a crime (tax evasion.)
If UBS doesn’t want to comply with a just, court ordered request for information about American citizens or entities cheating on their taxes, then why can’t we tell them they cannot conduct business in this country until they do comply?
someguy
These rich bastards should lose every f***ing penny they have. They can keep what they have in their secret accounts – but Uncle Sam gets to take the rest.
And I don’t give a f*** what the Swiss think about it. They’re accomplices to tax fraud and money laundering, as far as I’m concerned.
mai naem
There was a Boca Raton UBS customer who the feds went after. I don’t know exactly how much taxes he was trying to avoid but it sounds like it was either $9million or on $9million. He’s pleaded guilty and is facing a max of 3 yrs in prison. You know its one thing if you are not reporting a couple of thousand bucks you made under the table or whatever but don’t expect sympathy from me when you are avoiding taxes on millions of dollars. There’s something totally immoral of somebody who’s been given so much(yes I know they’ve worked for it) and tries to screw the government. They should be jumping for joy that they’re only paying as little as they are legally. BTW from what i remember from the original story he had 2 homes in Boca Raton. We are talking Boca Raton not Manhattan and the Hamptons or LA and Santa Barbara.
southflorida.bizjournals.com/southflorida/…/daily50.html
inkadu
Why waste the time? As George W. Bush (may the blessings of Allah be upon him) reminded us, rich people always evade taxes. So we should just give up trying to collect and save a lot of IRS dollars by making the tax rate for the rich 0%. We could MORE than make up for it by going after the scofflaws who improperly apply for the Earned Income Tax Credit.
MattR
@mai naem
I’ve wondered what we could afford to pay for (like maybe health care) if every person and business in this country actually paid their “fair share” of taxes without taking advantage of offshore shell companies. accounting tricks, loopholes in the law that were never intended for them, etc..
Tsulagi
They and other Swiss banks always have. They’ve long had agreement with the U.S. that if we show evidence of tax cheating/fraud or money laundering, they would divulge whether that person had a Swiss bank account and provide account records if they did.
The change is that the Obama admin is demanding they release account information for all U.S. citizens. Regardless of whether they’re suspected of tax cheating, laundering, or anything else. And it’s not being done by court order, it’s being done by demand from the administration that our wishes trump their laws on their soil.
But then these are the days of preemption. Whether it be the previous admin’s Bush doctrine, or this admin’s considering preventive detention. Looking forward to the progression applied here when federal or local authorities can simply say since it’s possible I may have x in my house or harboring records of criminal activity, they don’t need evidence to obtain a warrant to search, or even a warrant. Kinda like what we’re telling the Swiss.
Fulcanelli
What’s going to REALLY be fun to watch is if the names that they find happen to be US military personnel, Blackwater, KBR or Hallibuton employees who were or still are stationed in Iraq, Iraqi military or government officials.
Anybody remember how many BILLIONS of our tax dollars disappeared after the largest physical transfer of cash in history was dropped into a hot war zone in a foreign country and was put into the greasy hands of Bremmer’s Iraqi Provisional Authority?
This is gonna be good, if it goes down. Follow the money, bitches, follow the money.
burnspbesq
@MattR:
The most reliable estimates of the “tax gap” put it in the neighborhood of 300-350 billion per year of tax due but not able to be collected. Those estimates generally include only tax on unreported income, not additional tax that might be due if the IRS were to audit everybody and prevail on every contested issue.
burnspbesq
@Tsulagi:
The Swiss are happy to give up information about Swiss bank accounts in cases of tax evasion. The problem is that the definition of tax evasion under Swiss law is very much narrower than under U.S. law. And the Swiss, silly buggers that they are, think they are a sovereign nation entitled to have their own laws.
As I understand it, the settlement is going to be that UBS will give up account information of US residents in cases where the account was opened based on marketing activity undertaken by UBS employees in the United States. A pretty arbitrary and artificial distinction, but it seems to be something that both sides can live with.
inkadu
Wait a second, you lawyers.
If Switzerland is just doing what every other sovereign country does with it’s banking system, then what is The Big Deal with Swiss bank accounts? Or do other countries have laxer rules for sharing information?
And why the hell wasn’t this done after 9/11? Oh, right, because Saddam was responsible.
inkadu
its banking system. also.
Comrade Darkness
Didn’t some 10k of these account holders already come clean with the IRS just under threat of getting revealed? Sorry feeling very post-multi-beer lazy right now so don’t feel like searching. Maybe it was something in the Caymans than I’m thinking of.
At any rate. Knowing these people may have been struck with the fear of
godtaxes with a dash of prison time, makes me all warm and fuzzy.Comrade Darkness
@inkadu: 9/11 spurred an enormous clean up of the worldwide banking system. Make no mistake. Entire countries were blacklisted until they clean up their act and to survive they had no choice, something that should have happened decades ago, but the political will just never grew larger than the lobby it affected until then.
These rules are enforced by the OECD and here’s the latest news on the remaining scofflaws and the pressure on greater data sharing.
Wilson Heath
Statute of limitations never closes on a fraudulent tax return. Ever. The scofflaws would do well to accept whatever deal is offered for coming forward on a voluntary basis. Or it’s a world of hurt.
Barbara
The IRS offered criminal immunity to American UBS account holders who voluntarily disclosed their arrangements.
Switzerland does have a deal with the U.S., but it also requires banks to forego certain types of accounts and transactions on behalf of Americans, which the banks must certify to. UBS certified to this but certain mainly Swiss UBS employees proceeded to evade that deal through various means. These are the accounts for which, I believe, the U.S. has or will shortly be getting the names, and for which UBS paid the big fine, because the violation of U.S. law on UBS’s part was very clear.
Earlier this year, a number of jurisdictions, including the Isle of Jersey and Switzerland and Austria, agreed to certain restrictions or else their banks would find themselves decoupled from international banking systems — which, in the U.S., means that UBS et al. wouldn’t be able to have any arrangements with the Federal Reserve. That would be the kiss of death. You can’t run an international bank by schlepping cash around in cargo planes. Switzerland continues to maintain that this deal doesn’t require it to give up the names of American or German or French account holders.
Ultimately, Switzerland and other like countries (Andorra, Jersey, and various Caribbean islands) have to come to grips with the fact that it’s getting harder and harder for the rest of the world to agree with them in keeping up the pretense that secrecy serves much of any purpose besides covering up illegal activity.
inkadu
@Comrade Darkness: I gotta admit I still don’t understand what the “tax standards” are, probably because nobody has mentioned them. So I don’t know how special the exception Switzerland is carving out for itself; from the discussion here, it sounds like they are complying the same way everyone else is — but releasing per-client information after receiving some indication of wrong doing…
Anyway, if it comes up again, hopefully there will be a better link. Baking laws are not brightest blip on my radar screen at the moment.
Kapitalflucht
Switzerland’s a fishbowl. Has been for years. Leichtenstein, now there’s a privacy jurisdiction: Big Bother turned one mole and got some names but the country is still trustworthy. Another way to get some privacy, believe it or not, is to use smaller private banks in London. So much sloshes around that your little nest egg can fall between the cracks. All this money-laundering hysteria is a necessary first step for capital controls. When we admit we can’t reconcile economic crisis management with continued military bulimia, everyone with half a brain will bail out of dollar assets. They have to lock the doors before the masses smell smoke.