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September 24, 2009 - Phil Hodgen

Swiss court – tell U.S. customers what’s going on

The process of law is alive and well in Switzerland. U.S. customers of the Swiss bank UBS are using the procedures in a stalling effort. Unfortunately this may be a “postponing the inevitable” strategy for the taxpayers.

In today’s Tax Notes Today (2009 TNT 183-5), unfortunately hidden deep in the bowels (I use the term in its technical and anatomical sense)** of LexisNexis:

Swiss bank UBS has said that it will comply with a Swiss court order that compels the bank to inform two U.S. clients whether their account information has been or will be disclosed to the U.S. government.

A court in the Swiss canton of Ticino issued the order on September 21 in response to two U.S. clients who had turned to the court seeking clarification as to whether their account information would be turned over to the U.S. tax authorities in connection with the August 19 settlement of the IRS John Doe summons enforcement action, UBS spokesman Serge Steiner told Tax Analysts on September 23.

* * *

Steiner said the court order compels UBS to inform the two U.S. clients:

º whether their information has already been provided
to the Swiss Federal Tax Administration (FTA) or
the IRS;

º whether the bank has already decided to provide their
information to the FTA or the IRS; and

º whether the bank will provide the clients’ names
to the FTA or the IRS if the clients lodge an appeal
with the Swiss Federal Administrative Court in case
the FTA selects their account information for disclosure
to the U.S. government.

“UBS will comply with the order issued by the Ticino court to the extent it is able to do so,” Steiner said, adding that under Swiss law, UBS is not permitted to provide account information to the IRS outside of the administrative assistance process unless a client instructs the bank to do so. “This holds true whether or not a client decides to appeal a decision by the [FTA] granting administrative assistance,” he said.

* * *

UBS is analyzing all account relationships that could meet the “tax fraud and the like” criteria agreed to by the U.S. and Swiss governments, Steiner said. “This process will take several months but will be concluded within the established timelines,” he said.

If an account relationship appears to meet the criteria and fall within the scope of the U.S. treaty request, UBS will notify the affected clients as soon as possible and provide the account information (including the names of the account holders) to the FTA, Steiner said.

Resistance is futile. Submit and be assimilated.

**Hint.  As a buyer, I am unimpressed by the cost/benefit value of LexisNexis.  As an outside observer, however, I marvel at their rapacious pricing and cavalier clinging to 1977-era technology.

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