May 1, 2009

UBS rejects offshore U.S. tax authority

Swiss financial giant UBS, defending itself in a tax-evasion investigation, refused an IRS request to provide names of U.S. customers holding offshore accounts.

In rejecting the request, UBS officials told a U.S. federal court Thursday the matter should be handled in negotiations between the two countries, the Financial Times reported.

UBS submitted its respose to a legal demand by the Internal Revenue Service to reveal up to 52,000 accounts as part of the Obama administration's efforts to battle tax evasion.

The court submission of UBS, the world's largest wealth manager, was supported by comments by legal and constitutional experts. It argues that issues related to information about its U.S. offshore accounts are covered by the Switzerland-U.S. double taxation treaty, the Times said. The bank argues attempts to access information should be conducted through terms of the treaty, not in a court action.

In court documents submitted to a federal court in southern Florida, UBS portrayed itself as a victim of a larger dispute over bank secrecy between the United States and Switzerland.

In a separate criminal case, UBS agreed in February to pay $780 million to settle charges leveled by the IRS that UBS aided in tax evasion.

UBS's court submission came as the bank revealed Raoul Weil, who once headed the institution's wealth management group, was no longer employed. U.S. officials indicted Weil in 2008, alleging he conspired to assist in tax evasion, and subsequently declaring him a fugitive from justice. The bank said Weil, who says he's innocent, left UBS to concentrate on his defense.