Tension seems to be increasing between U.S. and Swiss officials who are trying to hammer out a settlement between the U.S. government and Swiss firm, UBS, regarding the names of 52,000 American clients of the firm. UBS retail financial advisors wish the tax-evasion case would just go away.
According to published reports, U.S. District Judge, Alan Gold, postponed an evidentiary hearing scheduled for today to August 3and 4 so that all parties could work on an amicable solution.
However, neither the Swiss nor the U.S. appear to be softening their stance on the case. The Justice Department said in a statement on Sunday regarding the judge’s postponement announcement that any settlement “would necessarily include a provision requiring UBS to provide the Internal Revenue Service information on a significant number of individuals with UBS accounts.” And this: “If an alternative resolution is not reached, the Department of Justice will continue to vigorously pursue enforcement of the summons through the court.” Meanwhile, the Swiss submitted a court filing a week ago saying it “will use its legal authority to ensure that the bank cannot be pressured to transmit the information illegally, including if necessary by issuing an order taking effective control of the data at UBS.” Of course, the U.S. could respond by seizing the Swiss firm’s American assets.
One of UBS’ top brokers, who manages more than $1 billion in assets for retail clients, says he just wishes the tax case would just go away. His clients talk to him about it at least once a week, he says. “I could leave, but that wouldn’t solve anything. My clients care about me and my team, as long as their money is safe with us, the rest is just noise,” he says.
The problem continues to be that Swiss banking laws—which say tax fraud is illegal, but not tax evasion—protect the names of the 52,000 American clients and giving them up would violate Swiss criminal law. UBS CEO Oswald Grubel has said in recent weeks this is why his firm cannot comply with the IRS’ request for these names. However, the U.S. says since the alleged tax evasion took place through UBS’ U.S. operations, U.S. laws—which say tax evasion is illegal—should apply. Attorneys quoted in the published reports suggest any settlement will ultimately result in amendments or overhaul of the current U.S./Swiss tax treaty.