- The Washington Times - Wednesday, March 4, 2009

The Senate’s investigative committee will push Swiss banking giant UBS AG Wednesday to release its closely-held list of American clients suspected by the Internal Revenue Service of skirting taxes, in an attempt to strengthen U.S. tax laws as they apply to foreign accounts.

Americans avoid an estimated $100 billion in taxes each year by hiding money in offshore tax havens, according to the Senate permanent subcommittee on investigations.

UBS has become the symbol for offshore tax havens since it admitted last month it had conspired to help U.S. clients conceal assets from the IRS.

In the deferred-prosecution agreement between the Justice Department and UBS, the company agreed to pay a $780 million fine and promised not to open new accounts for Americans without notifying the IRS.

At the same time, the company is fighting a summons filed in U.S. District Court in Florida to release the clients’ names, saying that to do so would violate Swiss law.

The agreement doesn’t require UBS to reveal its list of American clients, nor does the U.S.-Swiss banking treaty, according to Sen. Carl Levin, Michigan Democrat and chairman of the subcommittee.

“What we must do, given the insistence of Switzerland on maintaining their secrecy laws, is to strengthen our laws to go after people who use these tax havens to hide their assets and their income from Uncle Sam,” Mr. Levin said Tuesday.

For years, UBS employees have entered the United States to work with clients and acquire new ones. Employees were instructed on what to bring and not bring and how to avoid detection by U.S. officials, according to Levin aides.

UBS executives are scheduled to testify at the Senate subcommittee hearing Wednesday to answer questions on the IRS investigation and explain why it refuses to release the names of the American clients.

The bank has said it would reveal the names of a dozen of its clients, but only after notifying the clients and giving them time to appeal.

It’s unclear how many Americans have money in UBS’ Swiss banks, let alone other banks in other popular tax havens, such as the Cayman Islands, according to Levin aides.

The company said in July it had about 19,000 U.S. clients with $18 billion in assets. Other estimates put the number of accounts or clients at 52,000.

Mr. Levin’s legislation, which would strengthen U.S. tax laws against offshore tax offenders, was introduced this week. President Obama cosponsored similar legislation last year when he was in the Senate.

The legislation includes new provisions that would close a loophole that allows people to avoid paying U.S. taxes on U.S. stock dividends and would classify U.S.-controlled foreign corporations as domestic for income-tax purposes.

The president’s fiscal year 2010 budget includes $200 billion in savings over 10 years that is expected to come from closing tax-haven loopholes such as this one, Mr. Levin said.

UBS is a diversified global financial services company, with its main headquarters in Basel and Zurich, Switzerland. It is the world’s largest manager of private wealth assets and is also the second-largest bank in Europe, by both market capitalization and profitability.

Its U.S. headquarters is located in New York City.

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