While driving into work this morning, I heard a story on NPR about the IRS (mind you this is the U.S. IRS) pressuring UBS, a large Swiss bank, to reveal the names of the holders of some 19,000 private accounts.
UBS is known as the largest “manager of private wealth assets”, and a purveyor of the well known “Numbered Swiss Bank Account”. The IRS and US Justice Department applied enough pressure to cause the bank to fold finally, admitting to conspiring to defraud the IRS and they’re paying $380 million as a fine. Meanwhile, they are closing all the numbered accounts for US citizens and will either send them a check for the balance of the account (leaving a paper trail that the IRS can follow to indict people for tax evasion, money laundering, or worse) or set up a normal bank account with one of their subsidiary banks (requiring them to disclose the name and balance to the IRS).
What I don’t understand is how the US Government thinks it has a right to interfere in the goings on of a foreign business that has no holdings in the US. If this were going on on American soil, I’d acquiesce to a point. However, its a Swiss bank in Switzerland conducting its business in Switzerland. How would a US based bank react if the Italian government told them they owed $300 million to them for helping Italians evade taxes.
Don’t we have a State Department for scenarios like this? I thought the I in IRS stood for Internal as in within the US, and that the State Department dealt with foreign policy and dealing with other nations. Is what UBS doing illegal in Switzerland? If so they should be punished by Swiss law, not ours. If not then you send in the diplomats to deal with the situation.
Our government is like a little kid. They want everything their way and everyone has to play by their rules and they don’t understand when people try to play by different rules and it all ends with someone getting punched in the face and running home crying to mama. But in this case there is no mama, just a lot of big brothers that may not have bigger fists than us, but theres enough of them that put together we’re going to get hurt.
I don’t disagree with you on the little kid metaphor, but UBS has branches in the states, don’t they?
If they do, and those accounts can be accessed from them, I have to side w/the government on this one.
They do have branches in the US, but I don’t think they’re the kind of branches that us mere mortals use. Plus from what I understand, the money in question was passed first to an intermediary in Leichtenstein before being received by UBS. Very sneaky those bankers.
I’ve been interested in taxations for lengthier then I care to acknowledge, both on the private side (all my employed life history!!) and from a legal point of view since passing the bar and following tax law. I’ve rendered a lot of advice and righted a lot of wrongs, and I must say that what you’ve posted makes impeccable sense. Please continue the good work – the more people know the better they’ll be armed to comprehend with the tax man, and that’s what it’s all about.