July 1, 2008 / 12:23 AM / 9 years ago

U.S. seeks court order for UBS Swiss bank records

3 Min Read

WASHINGTON (Reuters) - The U.S. Justice Department said on Monday it asked a federal court in Miami to authorize the Internal Revenue Service to request information from UBS AG UBSN.VX about U.S. taxpayers who may be using Swiss bank accounts to evade federal income taxes.

The department said it seeks permission to allow the IRS to serve what is known as a "John Doe" summons on the Zurich-based bank. The summons is used to obtain information about possible tax fraud by people whose identities are unknown.

On June 19, former UBS banker Bradley Birkenfeld pleaded guilty in federal court in Florida to conspiring to defraud the IRS by assisting UBS clients in avoiding U.S. reporting requirements on income in Swiss bank accounts.

According to Birkenfeld's court statement, UBS employees assisted wealthy U.S. clients in concealing their ownership of assets held offshore by creating sham entities and then filing IRS forms falsely claiming the entities owned the accounts.

If approved by the court, the summons will direct UBS to produce records identifying U.S. taxpayers with accounts in Switzerland who elected to have their accounts remain hidden from the IRS, department officials said.

UBS said it was aware that U.S. authorities were seeking a court order for the records.

"UBS takes this matter very seriously and is working diligently with both Swiss and U.S. government authorities, consistent with Swiss law and the legal frameworks for intergovernmental cooperation and assistance," UBS spokeswoman Rohini Pragasam said in a statement.

Birkenfeld said in court that UBS had about $20 billion of assets under management in "undeclared" accounts for U.S. taxpayers.

The law requires a U.S. taxpayer to report all financial accounts in a foreign country if the total value of the accounts exceeds $10,000 at any time during the calendar year.

"We are working cooperatively with both the Swiss government and UBS to obtain this information. However, we are prepared to seek enforcement if that process is not successful," Deputy Assistant Attorney General John DiCicco of the department's tax division said in a statement.

IRS Commissioner Doug Shulman said, "The information we gather from this action will help us detect wealthy individuals who don't pay their taxes as well as provide details about how advisors facilitate this abuse."

Reporting by James Vicini, Editing by Tim Dobbyn and Braden Reddall

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