US report: UBS, other bank aided tax cheats
GENEVA - A Senate subcommittee accused banks in Switzerland and Liechtenstein of helping wealthy Americans evade billions in taxes each year, and urged the establishment of tougher laws to combat offshore tax havens around the world.
In a report released late yesterday, the Senate subcommittee on investigations estimated that offshore abuses were costing US taxpayers about $100 billion a year.
It recommended a range of reforms, including more stringent US requirements for foreign banks and harsher penalties for financial institutions failing to provide the Internal Revenue Service with details on all accounts their American clients are holding.
"Tax havens are engaged in economic warfare against the United States and the honest, hardworking American taxpayer is losing," said Senator Carl Levin, a Michigan Democrat and chairman of the subcommittee, which belongs to the Committee on Homeland Security and Governmental Affairs.
The panel's ranking Republican agreed. "It is simply unacceptable that some individuals are using offshore tax havens and secrecy jurisdictions to shelter trillions of dollars from taxation, forcing working families to shoulder the burden," Senator Norm Coleman of Minnesota said.
A Senate subcommittee hearing will be held today.
The 109-page report took aim specifically at Switzerland's UBS AG, arguably the world's largest wealth manager, and Liechtenstein's LGT group, owned by the principality's royal family.
The Swiss Finance Ministry and UBS declined to comment. The bank has said it is cooperating with Swiss and American investigations and will disclose records involving US clients who might have broken tax laws. But it has also banned its Swiss bankers from traveling to the United States.
A federal judge ruled earlier this month that the IRS could serve legal papers to UBS in an expanding probe of taxpayers who may have used overseas accounts to hide assets.
The Justice Department requested the summons after former UBS private banker Bradley Birkenfeld, 43, pleaded guilty in a Florida court to defrauding the IRS. Birkenfeld said in court that UBS has about $20 billion in assets in undeclared accounts for US taxpayers.
Prosecutors say Birkenfeld and others helped California billionaire Igor Olenicoff hide $200 million in assets overseas. Olenicoff, who controls a real estate empire, pleaded guilty last year to tax charges and agreed to pay the IRS more than $52 million.
US taxpayers are required to report all foreign financial accounts if their total value exceeds $10,000 at any point during a given year, prosecutors said.
