Banking giant UBS, US reach deal over secret Swiss accounts
Agreement averts a legal showdown, for now, over case involving US pursuit of tax evasion.
A Justice Department lawyer announced Friday that the Swiss bank and US officials had reached a tentative agreement on an American government demand that UBS identify the owners of 52,000 secret Swiss accounts believed to be held by American tax evaders.
The announcement came during a telephone status conference in advance of a scheduled hearing in Miami on Monday. Justice Department lawyer Stuart Gibson, with the tax division, told US District Judge Alan Gold that the Monday hearing appeared unnecessary.
"I am reporting to the court that the parties have reached an agreement in principle on the major issues," Mr. Gibson said. "There are some other issues that need to get resolved and we expect to be able to resolve them during the coming week."
Gibson did not disclose details of the agreement.
Judge Gold postponed Monday's hearing for a week, until Aug. 10, in case the agreement falls apart. He also set another status conference for next Friday. Gibson told the judge the parties hoped to report a final agreement during that Aug. 7 status conference.
IRS wants account owners named
UBS and the Swiss government have been battling the US Internal Revenue Service for months over an IRS demand that the Swiss bank reveal the ownership of 52,000 secret accounts believed held by Americans.
Secretary of State Hillary Rodham Clinton and Swiss Foreign Minister Micheline Calmy-Rey met Friday and discussed the issue. Before the meeting both said they were pleased that a tentative agreement had been reached.
UBS and the Swiss government have argued that compliance with the IRS demand would force them to violate strict bank secrecy laws in Switzerland, subjecting UBS officials to criminal sanctions under Swiss law, including prison. They have also argued that such action would violate a US-Swiss treaty.
Lawyers with the Justice Department's tax division have said they are merely seeking information from the US office of a foreign bank operating in the US. "The IRS should not have to sit idly by while tens of thousands of its citizens violate US law with impunity," government lawyers have said in a court-filing.
UBS record is less than sterling
The dispute is not new. In February, UBS agreed to identify 300 account holders while admitting that it actively helped certain customers to avoid paying US taxes. The bank also paid $780 million in fines. The plea deal helped the bank avoid a messy trial, but it did not end US scrutiny.
US tax authorities continued to investigate. They went to court asking a judge to order UBS to turn over information about the 52,000 Swiss bank accounts.
So far, three UBS clients in the US have pleaded guilty to filing false tax returns. Robert Moran, a Fort Lauderdale, Fla., yacht broker, admitted wrongdoing in April, and Steven Michael Rubinstein, a Boca Raton, Fla., accountant, pleaded guilty in June.
On Tuesday, Jeffrey Chernick of Stanfordville, N.Y., pleaded guilty in federal court in Fort Lauderdale to concealing more than $8 million in UBS accounts in Switzerland. Mr. Chernick owns a corporation that represents toy manufacturers in China.
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