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The Tax Prophet Newsletter   Issue #70 February, 2009

REDUCE TAXES!
CHECK OUT THE TAX PROPHET'S Action Guides


In This Issue:
Introduction
Tax Fraud
"007" Intrigue
Disclosure
Conclusion


Swiss Bank Admits to
U.S. Tax Fraud


Introduction

The shadowy world of Swiss banking -- with its secret off-shore accounts and undetectable financial transactions -- was dramatically and publically exposed when UBS, AG, Switzerland's largest bank, entered into a "deferred prosecution agreement" with the U.S. Justice Department on tax massive fraud charges.

UBS must pay a $780 million fine (roughly four years of profits from their criminal enterprise), identify all U.S. clients and stop supplying secret accounts to U.S. taxpayers.

Tax Fraud

UBS was charged with tax fraud because it voluntarily agreed with IRS to report income and withhold taxes on U.S. taxpayers, then it deliberately evaded its responsibilities by using sham entities and fictitious names to open new accounts.

The government contends that from late 2002 to 2007, UBS helped U.S. taxpayers illegally hide $20 billion, thereby evading $300 million in taxes annually.


"007" Intrigue

Acting like James Bond, UBS bankers travelled to the U.S. at least 3,800 times, using encrypted laptops and other counter-surveillance techniques to prevent the detection of the identities and offshore assets of their U.S. clients.

UBS provided U.S. clients with high-tech gadgets containing specially coded computer chips that allowed clandestine access to their accounts and transfers of their wealth. The passwords changed each time the accounts were accessed.


Disclosure

The Justice Department has demanded that UBS disclose the identities and banking records of 52,000 suspected U.S. tax cheats.

The disclosure could ruin Switzerland's vaunted bank secrecy laws and cripple its international banking system. However, disobeying a court order requiring disclosure would cause UBS to default under the deferred prosecution agreement and its top executives could be indicted on felony tax charges.


Conclusion

Those U.S. taxpayers with Swiss bank accounts should be, understandably, quaking in their Gucci loafers.

IRS is warning them to come forward voluntarily before they are indentified, or they could be staring at serious criminal tax evasion charges.




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All contents copyright 2009 Robert L. Sommers, attorney-at-law. All rights reserved. This newsletter provides information of a general nature for educational purposes only and is not intended to be legal or tax advice. This information has not been updated to reflect subsequent changes in the law, if any. Your particular facts and circumstances, and changes in the law, must be considered when applying U.S. tax law. You should always consult with a competent tax professional licensed in your state with respect to your particular situation. The Tax Prophet is a registered trademark of Robert L. Sommers.