The two senior members of the tax-writing Finance Committee of the US Senate have warned that the recent settlement between the Internal Revenue Service and UBS, which requires the Swiss bank to hand over details of almost 4,500 US clients, is just the start of a much more aggressive crackdown against offshore banking and privacy.
Commenting on the August 20 agreement, Finance Committee Chairman Max Baucus said that the settlement represents an “important step in the fight against offshore tax fraud” but he indicated that the “fight is far from over.”
“We do not know whether the UBS scams represent the iceberg or the tip of the iceberg and I am eager to find out more about this issue,” he said. “I look forward to examining the details of this settlement and will continue working with the IRS to provide them the tools it needs to combat and prevent such abuses.”
However, his Republican colleague on the finance panel, Chuck Grassley of Iowa, is less convinced that the UBS settlement is a good deal for US taxpayers.
“It may be but before I render that judgment, I need to know more, including how the IRS whittled down 52,000 accounts to 4,450,” he said. “I’m also interested in whether the IRS is pursuing enforcement involving other countries, too, especially those that don’t have tax treaties with the United States.”
The process of handing over the names to the US authorities is to be operated via the existing US-Swiss double taxation agreement, thus bypassing the problem faced by UBS of breaking Swiss banking secrecy laws – a main sticking point in reaching a settlement.
In March, Baucus issued a preliminary staff draft of proposals that would give the IRS better tools to “detect, deter and discourage” offshore tax evasion.
The Baucus bill would require entities transferring funds offshore (other than on behalf of publicly traded companies) to report to the IRS the amount, destination and account information of funds transferred. He expects to move this legislation in the coming months.
A comprehensive report in our Intelligence Report series, examining in depth the situation of offshore transparency and secrecy in a number of the most prominent jurisdictions, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report2.asp
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