The Swiss Bank UBS has closed the hidden accounts of about 19,000 wealthy American clients after being pressured by the I.R.S. It is suspected that those clients have undeclared money and Uncle Sam wants its piece of the pie.
The assets will be sent to other banks or divisions of UBS. Some account holders will have a chech for their accounts mailed directly to them. Thus a paper trail is in place for United States prosecutors looking to see if the monies were placed into an account to avoid paying taxes.
Those checks put the wealthy in a bind. If they do nothing they are throwing away money. If they are guilty and cash the checks then the I.R.S. has a paper trail leading them directly to prosecutors.
The New York Times reports:
“You can either take that check and throw it in the woods, or deposit it somewhere and get busted,” said a UBS client, who asked not to be named because of the investigations into UBS and its clients. “There’s nowhere to hide.”
It’s not illegal to use offshore accounts in the United States as long as citizens report them and pay their taxes. In July UBS announced that it would no longer be offering private accounts to American clients that went undeclared to the I.R.S. It’s believed that the world’s largest bank, UBS helped the upper tier of Americans to hide about $18 billion. That would mean keeping about $300 million out of Uncle Sam’s hands each year.
The United States Justice Department is putting a damper on UBS’s policy of Swiss banking secrecy.
Some Americans have found after being approached by the IRS that their accounts have been not been closed for up to three months. This could help those under the microscope as the I.R.S. is more suspicious if offshore money is moved just as the acount holders come forward.
William M. Sharp Sr., a tax lawyer who represents several UBS clients, said, “UBS has been very supportive of their American clients who have chosen to undergo disclosure.”
Still, he added that “our view is that if the account is closed and funds are moved to another institution, here or abroad, it could make the case tougher for the clients before the I.R.S., because it could be new violations of money-laundering controls.”