Carefully negotiated settlement agreement between the IRS and Switzerland’s UBS on hold

June 16, 2010

On August 19, 2009, UBS announced the formal signing of a settlement agreement with the IRS of the United states regarding the John Doe summons issued on 21 July 2008. The summons has been the subject of a civil action in the United States District Court of the Southern District of Florida. According to document 8/20/09 Stock Information 02:00:27,

the principal terms of this settlement agreement and the related agreement entered into at the same time by the governments of Switzerland and the United States are described: The agreement does not call for any payment by UBS. Moreover, it resolves all issues relating to the alleged breaches of UBS’s Qualified Intermediary Agreement with the IRS as set forth in the Notice of Default dated 15 May 2008. As part of the settlement, the parties will promptly file a stipulation with the court to dismiss the enforcement action relating to the John Doe summons. In accordance with the separate agreement between the United States and Switzerland, the IRS will submit a request for administrative assistance pursuant to the existing US-Switzerland Double Taxation Treaty to the Swiss Federal Tax Administration (SFTA). This request will seek information relating to certain accounts of US persons maintained at UBS in Switzerland. It is expected that approximately 4,450 accounts will be provided to the SFTA in response to this treaty request.

The tax treaty referenced can be retrieved from the USTREATIES database with the search, CTR(SWITZERLAND) & TE(TAX /3 FRAUD!)

Today June 8th, the lower house of Switzerland, the National Council, voted against the deal, 104 against to 76 in favor, after the Council’s demanded amendments were refused. Sixteen lawmakers abstained. The Council did vote to send the measure to a referendum if necessary. The Council of State, the upper house, last week voted in favor of the deal and against a referendum. The two houses will begin Wednesday to try to reconcile their differences. They have until June 18 to reach agreement before the end of the parliamentary session. The deadline for UBS to hand over client data in the action is August 2010.