Tax Whistleblower Blog

IRS Seeks Records from Swiss Bank

The Internal Revenue Service is taking the unprecedented step of seeking Swiss bank records in search of what it suspects could be up to $20 billion worth of assets hidden by U.S. taxpayers.

Justice Department lawyers said late Monday that they had filed court documents in Miami asking a judge to allow the IRS to get information from the banking giant UBS. U.S. investigators are seeking permission for the first time to serve what are called “John Doe” summons to obtain information about possible tax fraud against taxpayers whose identities are not known.

Information stemming from a guilty plea by a former UBS banker last week in Miami suggests the Zurich-based bank had “undeclared” accounts of U.S. taxpayers estimated at about $20 billion. U.S. tax laws require any accounts abroad worth more than $10,000 to be reported — and penalties call for up to half of the amount in a hidden account to be forfeited.

The U.S. government is seeking cooperation from the Swiss government and the bank, but they are prepared to seek enforcement if that process is not successful. 

This type of case shows just how long the reach of the IRS can be.  Information and money that was thought to be hidden in Swiss Banks, is accessible under U.S.-Swiss treaties.  Although this case is probably not the result of a referral under the Tax Whistleblower Reward Program, it should give encouragement to Whistleblowers who have information on U.S. taxpayers who secretly stash money away using tax shelters and foreign bank accounts in order to underreport U.S. tax.