- The Washington Times - Wednesday, August 19, 2009

The governments of Switzerland and the U.S. released more details Wednesday about a recent agreement that calls for Swiss banking giant UBS AG to give the IRS 4,450 accounts held by American citizens, a deal that gave the U.S. tax agency less than a tenth of what it had sought and that the Swiss say will preserve their system’s reputation.

The agreement, which was reached last week, ends months of legal wrangling that at its core amounted to a direct challenge to centuries-old Swiss banking laws.

“I’m very pleased that we have successfully concluded negotiations that will result in our receiving what we wanted all along from the beginning of our investigation into UBS,” IRS Commissioner Doug Shulman. “We will be receiving an unprecedented amount of information on taxpayers who’ve evaded their tax obligations by hiding money off-shore at UBS.”

Earlier this year, UBS and the U.S. reached a $780 million settlement to settle accusations that UBS helped Americans hide money from the IRS.

As part of the agreement, UBS turned over information from 250 accounts that held by Americans that the Swiss government had linked to tax fraud, which meant releasing them didn’t violate that country’s banking secrecy laws.

But the U.S. wanted more — information from as many as 52,000 accounts. That put UBS in the predicament of potentially violating a U.S. court order or Swiss banking secrecy laws.

“I am confident that the agreement will allow the bank to continue moving forward to rebuild its reputation through solid performance and client service,” UBS Chairman Kaspar Villiger said in a statement. “UBS welcomes the fact that the information-exchange objectives of the settlement can be achieved in a lawful manner under the existing treaty framework between Switzerland and the United States.”

The Swiss Bankers Association downplayed any threat the agreement has to the future of Swiss-banking secrecy.

“The solution found conforms entirely with prevailing Swiss law,” the group said in a statement. “This is of crucial importance for the Swiss financial center because international clients rely very much on the predictability and stability of the Swiss legal system.”

The IRS refused to disclose the reasons it sought, and the Swiss goverment agreed to release, information from the 4,450 accounts covered by the agreeement.

In a statement, the Swiss government said turning over information from the 4,450 accounts will not violate Swiss law because those accounts were involved in “tax fraud and the like.”

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