NY state sees "deep well" of UBS client tax cases

NEW YORK (Reuters) - New York state could glean considerable sums from UBS clients who have evaded taxes by hiding money in offshore accounts once the federal government starts handing over its data to the states, a New York state tax official said.

“That’s really a deep well and I expect we’ll be digging in that well for some time,” William Comiskey, New York State Tax Department’s Deputy Commissioner for enforcement, told Reuters by telephone on Friday.

The state, unlike the U.S. government, has an open-ended program for people who voluntarily reveal their misdeeds and some have already turned to it. “People are coming in on their own,” Comiskey said, adding data were still preliminary.

New York, like California, Florida, Connecticut and New Jersey, is home to many of the nation’s mega-rich and thus its residents could include a number of the Swiss bank’s clients.

UBS declined to comment.

Ahead of the April 15 tax filing deadline, U.S. officials began bringing a wave of suits against UBS clients.

In a separate move, New York state is expanding on analytical programs developed with International Business Machines Corp to root out tax cheats.

After reaping more than $1 billion since 2004 by uncovering “questionable” refund claims, New York state is focusing on lost sales taxes and its multibillion-dollar backlog of delinquent collections.

A new database will, for example, match the sales total reported by a national franchiser for a New York store with what that vendor reports, Comiskey said. The system will also identify “high-value” targets and recommend whether to start by contacting them or launch an examination or a criminal probe.

Until now, Comiskey’s 3,000 employees have relied on their “best gut instinct” to figure out the best approach. “What this machine would do is give you like a collective memory of what’s done well and what’s done poorly,” he said.

IBM, which hopes to sell its software and services to other states, in a statement said: “The plan optimizes the order of activities agents will take in order to maximize the total amount of debts collected while taking into consideration the case load, personnel resources, and the anticipated effectiveness of the suggested actions.”

Reporting by Joan Gralla; Editing by Diane Craft