November 26, 2008

UBS clients seek amnesty on U.S. taxes: report

The logo of Swiss bank UBS is pictured on a building in Zug October 17, 2008.



(Reuters) – Some wealthy clients of UBS AG are coming forward to make amends with U.S. tax authorities after a former UBS private banker was indicted, a sign that U.S. efforts to battle offshore tax evasion are having the desired effect, the Wall Street Journal reported on its website.

UBS said it did not comment on market speculation and rumor, when asked about the report by Reuters.

The UBS clients are hiring tax lawyers and pursuing amnesty through an Internal Revenue Service (IRS) voluntary disclosure program, the paper said.

Under the program, U.S. citizens would be allowed to avoid criminal prosecution if they acknowledge evasion and agree to pay taxes and penalties, the paper said.

The moves come as UBS, U.S. authorities and the Swiss government have accelerated talks aimed at releasing data on the offshore accounts of U.S. taxpayers, the paper said, citing people familiar with the matter. U.S. authorities believe some 20,000 U.S. citizens worked with UBS private bankers to avoid taxes.

The IRS is considering a national settlement that would speed up the process for UBS clients to come forward en masse and is likely to be based on a 2003 landmark offshore credit-card and tax-fraud deal with stiffer penalties, according to the paper.

Such a settlement could obviate the need to gain the cooperation of the Swiss government, which has been reluctant to turn over private-bank client information, the paper said.

Switzerland has a narrower definition of tax fraud than the United States and will only exchange account data with foreign authorities if they can prove tax fraud.

U.S. authorities have requested broad access to thousands of accounts at UBS held by U.S. clients as part of their investigation.

Earlier this month, U.S. authorities charged UBS board member Raoul Weil with helping Americans hide $20 billion from the IRS. [nLD494952]

A spokesman for UBS told the Journal that the bank "is treating these still ongoing investigations with the utmost seriousness and will address and correct any issues raised in the investigations, including by taking appropriate disciplinary action."

(Reporting by Ajay Kamalakaran in Bangalore; Editing by Kim Coghill)

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