Department of Justice SealDepartment of Justice
Monday, June 30, 2008
(202) 514-2007
TDD (202) 514-1888

Justice Department Asks Court to Serve IRS Summons for UBS Swiss Bank Account Records

Bank Records Could Identify Those Who Use Swiss Accounts to Evade Income Taxes; Former Employee Estimates $20 Billion in Assets in Undeclared Accounts for U.S. Citizens

WASHINGTON - The Justice Department announced today that it has filed papers seeking an order from a federal court in Miami, Fla., authorizing the Internal Revenue Service (IRS) to request information from Zurich, Switzerland-based UBS AG about U.S. taxpayers who may be using Swiss bank accounts to evade federal income taxes. The Justice Department seeks permission to allow the IRS to serve what is known as a "John Doe" summons on the bank. The IRS uses a John Doe summons to obtain information about possible tax fraud by people whose identities are unknown.

On June 19, 2008, former UBS banker Bradley Birkenfeld pleaded guilty to conspiring to defraud the IRS by assisting UBS clients in avoiding U.S. reporting requirements on income in Swiss bank accounts. According to Birkenfeld’s court statement, UBS employees assisted wealthy U.S. clients in concealing their ownership of assets held offshore by creating sham entities and then filing IRS forms falsely claiming that the entities were the owners of the accounts.

The John Doe summons, if approved, will direct UBS to produce records identifying U.S. taxpayers with accounts at UBS in Switzerland who elected to have their accounts remain hidden from the IRS. In his court statement, Birkenfeld claims UBS had approximately $20 billion of assets under management in "undeclared" accounts for U.S. taxpayers.

The law requires a U.S. taxpayer to report all financial accounts in a foreign country if the total value of the accounts exceeds $10,000 at any time during the calendar year. A willful failure to report a foreign account can result in a penalty of up to 50 percent of the amount in the account at the time of the violation.

"We are working cooperatively with both the Swiss government and UBS to obtain this information. However, we are prepared to seek enforcement if that process is not successful," said John A. DiCicco, Deputy Assistant Attorney General for the Justice Department’s Tax Division. "We will work hand-in-hand with the IRS to vigorously enforce the tax laws against those taxpayers who use offshore accounts to evade taxes."

"Offshore accounts harbor billions of dollars, and people should take notice that the secrecy surrounding these deals is rapidly fading," said IRS Commissioner Doug Shulman. "The information we gather from this action will help us detect wealthy individuals who don’t pay their taxes as well as provide details about how advisors facilitate this abuse."