This post was written by GAP Homeland Security Director Jesselyn Radack for her Daily Kos Blog.
The U.S. settled a civil suit against UBS,
the largest bank in Switzerland, on the condition that UBS turn over the names
of 4,500 Americans using Swiss bank accounts to hide money from the IRS. The
U.S. has turned this into a game of Tax Haven Roulette by giving Americans a
chance to enter the IRS's "Voluntary Disclosure Program," before
their names might be revealed, and get a lesser penalty for coming forward.
Now there's a Swiss fly in the ointment of
what was already a weak plea "bargain" on behalf of the U.S. (it
settled for 4,500 names out of 52,000 sought--less than 10% of those it had
been seeking.) A Swiss judge has just ruled that UBS must inform clients
if they are going to reveal their identities. So much for the U.S.
wearing the giant hat of cleverness...
Swiss financial giant UBS systematically and
deliberately violated U.S. law by helping tens of thousands of U.S. clients
dodge U.S. taxes via offshore bank accounts. The U.S. filed suit
demanding that UBS hand over the identities of the clients and their account
details, presumably so the government can pursue tax evasion cases against
them. In a lame plea deal, Switzerland agreed to turn over 4,500 of the
52,000 names sought.
The IRS established a clever "Voluntary
Disclosure Program" for tax cheats who are worried that they might be on
the list to come forward in exchange for lesser penalties and the avoidance of
criminal charges (meanwhile, only the whistleblower who made this all possible,
Brad Birkenfeld, is going to jail).
The U.S. thought it had quite the mind-game
going until Judge Francesco Trezzini of Lugano, Switzerland ruled yesterday on
behalf of two of UBS's American tax cheats, ordering the bank to immediately
notify them if their identities have been forwarded to the IRS (or if they
might be). In other words, the judge in Switzerland is now forcing UBS to
tell these 2 clients and the rest of UBS's American clients with Swiss bank
accounts if their names will be given to the IRS.
This is a major setback for the Department
of Justice, which only handles up to a maximum of 1,000 tax cases a year. The
Voluntary Disclosure Program--now unashamedly being referred to as the
"Amnesty Program" by the government--is nothing but a system to allow
the IRS and DOJ to do nothing and collect monies they never would have seen. So
much for Doug Shulman (IRS Commissioner) promoting his "robust"
whistleblowing program--it was Congress that established this, not this
Bush-appointed flunky.
The Voluntary Disclosure Program was
extended to scare more people to come in, but it is obvious the IRS cannot even
handle the flow of over 3,000 clients (hence the recent extension). This
program ends on October 15 and might be extended a third time because the IRS
is so incompetent. The most important fact is, if clients are
told before the Voluntary Disclosure deadline (as the Swiss judge has
demanded), then the clients will know if there names are not on the list they
and they can remain silent and slip away forever. Good job Justice
Department - another bungled investigation thanks to Kevin Downing (the same
guy who screwed up the KPMG prosecution).
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