The IRS Strikes Back - UBS Under The Kosh

Amendment to business plan: NO AMERICAN CLIENTS.

Don't get me wrong, as I have said before, I love our American cousins. Any nation that can put up with the nanny state like they do and still smile and wave the flag is OK by me. Their TV is great, their movie stars gorgeous (Sorry Megan Fox, I am married) and their soon to be President is black and cool.. go Obama.

There is a tincy,wincy problem though; the IRS. I cannot imagine being subject to the draconian laws that the IRS lay down, it is incredible and now the all seeing, all powerful IRS has its sights on Switzerland... and guess what? We have another canary spilling his guts..

The federal authorities are now intensifying an investigation into offshore bank accounts, the secrets of this rarefied world are being dragged into the open and its UBS who are backed against a wall.

As if they don't have enough problems, UBS is considering whether to divulge the names of up to 20,000 of its well-heeled American clients, according to people close to the inquiry, a step that would have once been unthinkable to Swiss bankers, whose traditions of secrecy date to the Middle Ages. (source CNBC)

Federal investigators believe some of the clients may have used offshore accounts at UBS to hide as much as $20 billion in assets from the Internal Revenue Service.

Doing so may have enabled these people to dodge at least $300 million in federal taxes on income from those assets, according to a government official connected with the investigation. One prominent UBS client, a wealthy property developer in California named Igor Olenicoff, has already pleaded guilty to filing a false 2002 tax return.

But as the investigation tears holes in the veil of secrecy surrounding tax havens like Switzerland and Liechtenstein, other names are surfacing, according to the authorities. New revelations are likely to come Monday, when a former UBS banker is expected to testify in a court in Florida about how he helped Mr. Olenicoff and other clients evade taxes.

The former banker, Bradley Birkenfeld, is set to plead guilty to helping Mr. Olenicoff conceal $200 million. "He's going to sing like a parakeet," (Europeans read 'Canary') one of Mr. Birkenfeld's former clients said. UBS said that it was 'cooperating' with investigators and that it was against its policy to help Americans evade taxes. Officials at the bank declined to comment for the CNBC article.

Using offshore accounts is not illegal for United States taxpayers, but hiding income in so-called undeclared accounts is. At issue is whether the UBS clients filed W-9 tax forms with the I.R.S., disclosing securities and assets held offshore, as required by law.

Switzerland does not consider tax evasion a crime, and using undeclared accounts is legal here.

The case could turn into an embarrassment for Marcel Rohner, the chief executive of UBS and the former head of its private bank, as well as for Phil Gramm, the former Republican senator from Texas who is now the vice chairman of UBS Securities, the Swiss bank's investment banking arm.

It also comes at a difficult time for UBS, which is reeling from $37 billion in bad investments, many of them linked to risky American mortgages.

The federal investigation, which is part of a broad, international crackdown on tax cheats, suggests that United States authorities are shifting their focus to Liechtenstein and Switzerland from Caribbean havens like the Bahamas and the Cayman Islands.

The Senate Permanent Subcommittee on Investigations is scheduled to hold hearings as early as this month on offshore products sold by UBS and by the LGT Group, the bank owned by Liechtenstein's royal family.

At the center of the UBS investigation is Mr. Birkenfeld, 43, who grew up in the Boston area and went on to live what might seem like a charmed life as a private banker in Switzerland. Through his lawyer, Danny Onorato, Mr. Birkenfeld declined to comment.

Mr. Birkenfeld's testimony could deal a stinging blow to UBS, the world's largest money manager for people whom bankers politely call "high net worth individuals." Since 2006, the bank has opened plush offices in New York and six other United States cities, among them Boston, Chicago and Houston, to cater to people who are worth at least $10 million.

Many UBS customers are worth far more than that. To lure them, UBS bankers canvassed cultural and sports events like Art Basel, the America's Cup and Boston Symphony Orchestra concerts said CNBC.

"It's not a question of finding wealthy people; it's a question of how do you develop a network," said Purvez Siddiqi, who recruits private bankers like Mr. Birkenfeld for big banks.

But Mr. Siddiqi said he was "astonished" by how aggressively UBS marketed its offshore accounts to Americans. Mr. Birkenfeld took care of important clients for UBS's private bank catering to United States citizens with offshore accounts, and was central to UBS's effort to lure them.

Most of the above is from the CNBC site so please, UBS, sue them and don't close my account! The thing is UBS, in Switzerland at least, are the quintessential Swiss bankers. Polite, informed, discreet and efficient but when expanding overseas you may take your brand name, but do you take your culture?

Being 'astonished' at how aggressively UBS market their products in the US is a bizarre statement. If I stay in a hotel in the US the breakfast is marketed with 'astonishing' aggression.. "What tea would you like sir.. Earl Grey, breakfast, green tea.... and how would you like your eggs? Sunny side up? Hard boiled, soft boiled, scrambled.. over a naked dancing girl? It can take a week just to order some sausages.

That is the culture of the US, nothing wrong with it, it's just the way it is. Do we imagine for a second that UBS in the States is staffed by 5000 Swiss bankers? It's Americans who are taught from an early age to 'Go For It'. I bet the UBS products were no more aggressively marketed than the sausages at my hotel. If UBS have made a mistake it is being outside Switzerland.... With the UK tax mafia, the German secret police bribing people and the IRS squeezing ex bankers... its time to baton down the hatches and close offices anywhere the other side of the Alps.

The problem in the US is with a bazillion million trillion dollar debt, wouldn't you chase every penny of tax dollars you could get?

No, sorry US People... love you and all that.... but being whisked away by men in black suites while I am on my way for fondue and being dumped in 'Gitmo' for ten years is not my cup of aggressively marketed tea...