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52,000 Tax Evaders Now Holding Financial World Hostage
According to Reuters, the amended deal between the IRS and Switzerland to cut down the number of disclosures from 52,000 to 5,000 comes on the heels of the understanding by the US Treasury that after Goldman and CRE, it is now 52,000 tax cheats who hold the financial world hostage. Apparently if all the 52,000 tax evaders fled from UBS, it would spell the end of the world (once again).
"NZZ am Sonntag said the U.S. government had backed off from the original demands of the Internal Revenue Service (IRS) because the U.S. Treasury Secretary did not want to provoke another financial crisis by pushing UBS over the edge."
At what point with Tim Geithner show a modicum of backbone and actually do the right thing instead of bowing to pressure from any which direction? The irony is that for all intents and purposes Swiss bank secrecy is over:
NZZ am Sonntag said the names of those to be disclosed would be those suspected of committing tax fraud under the terms of the double taxation agreement, which obliges Switzerland to provide help if Washington seeks it in a criminal investigation.
Accounts below a certain size would not be reported, but this limit would be kept confidential so that account-holders could never be sure whether they were vulnerable, it said.
However, account-holders threatened with disclosure would be able to challenge the move in the Swiss courts, it said.
Some observations here: First, the CHF is likely about to tank. While a net dollar positive, this may in fact benefit Europe and specifically the CRE and residential bubble, especially in Central and Eastern Europe, where mortgages are mostly denominated in Swiss Francs. Undoubtedly, this has been a long-term consideration of the US Treasury and the Federal Reserve. Second, with all the money that is about to surface from previously undisclosed bank accounts, estranged wives of husbands who somehow are suddently hundreds of millions of dollars richer, will make divorce very, very happy. Look for a flood of divorces over the next several months as the battle for the spoils picks up in earnest.
And here is the official IRS press release:
IRS to Receive Unprecedented Amount of Information in UBS Agreement
IR-2009-75, Aug. 19, 2009
WASHINGTON — The Internal Revenue Service and the Department of Justice today announced the successful negotiation of an agreement that will result in the IRS receiving an unprecedented amount of information on United States holders of accounts at the Swiss bank UBS.
As a result of this agreement, the IRS will receive substantially all of the accounts that it was interested in when it initiated the John Doe summons against UBS.
Under the agreement, the IRS will submit a treaty request to the Swiss government describing the accounts for which it is requesting information. The Swiss government will then direct UBS to initiate procedures to turn over information on thousands of accounts to the IRS. The IRS will receive information on accounts of various amounts and types, including bank-only accounts, custody accounts in which securities or other investment assets were held and offshore company nominee accounts through which an individual indirectly held beneficial ownership in the accounts.
Also, the agreement retains the U.S. Government’s right, if the results are significantly lower than expected and other measures fail, to seek appropriate judicial remedies, including resuming actions to enforce the John Doe summons.
The agreement involves a number of simultaneous legal actions:
- The judicial enforcement of the John Doe summons will be dismissed. While this enforcement motion will be withdrawn, the underlying summons remains in effect.
- Upon receiving the treaty request, the Swiss government will direct UBS to notify account holders that their information is included in the IRS treaty request. It is expected that these notices will be sent on a rolling basis with some being sent over the coming weeks and others over the coming months. Receipt of this notice will not by itself preclude the account holder from coming into the IRS under the Voluntary Disclosure Program.
In addition, the Swiss Government has agreed to review and process additional requests for information for other banks regarding their account holders to the extent that such a request is based on a pattern of facts and circumstances equivalent to those of the UBS case.
Information provided to the IRS through this process will be thoroughly examined for all potential civil and criminal tax violations. The IRS will assess any additional tax, interest and a number of applicable penalties. This includes the penalty for the willful failure to file an FBAR. This penalty can be up to 50 percent of the value of the account for each year an FBAR was not filed.
The IRS will also recommend criminal prosecution in those cases where the facts warrant such an action. To date, the IRS and the Department of Justice have successfully prosecuted four United States customers of UBS whose information was provided to the IRS by UBS as part of the Deferred Prosecution Agreement.
Individuals whose information is obtained by the IRS through this process will, by longstanding policy, not be eligible for the voluntary disclosure program.
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No Doubt!! it would kill our goverment!!! Just imagine what Nancina Piglosi looks like without Botox!
SO IF YOU WERE ONE OF THE 4,000 that is getting screwed why would you NOT SUE? So how can you selectively be targeted? On what grounds? The swiss and US just stepped in it?
"where mortgages are mostly denominated in Swiss Francs."
I thought it was Euros? How big an impact will the devaulation of the Franc have on keeping the Eastern European banks alive on life support?
High Five Mos!!...you now have imunity from attacks...;-)
probably substantial. the Swiss National Bank has been pooring Swiss Francs on the market just to stop the value of the CHF appreciating against the Euro over a certain level.
In Hungary I think it is about 80 to 90% of the mortgages that are denominated in Swiss Francs.
no, they were taking out mortgages in CHF because the interest was lower than on EUR denominated loans. It was massive couple of years ago. I can only speak for central Europe, but i don't think Russians took out CHF loans or mortgages; but USD ones. Also I am sure Baltic states were ape shit insane over JPY carry. And its not E.Eur banks you need to keep an eye on; but on Austrian, Belgian and Italian ones. Austrian banks lent out 70% of Aus. GDP to Russians and Ukrainians. And check out the latest RIA report ( its scary ).
It's not the Eastern European banks that you have to be worried about, it's the Austrian banks who borrowed in Swiss francs from Swiss banks to lend to Eastern Europe that are at risk first. Of course, it also affects other EU banks, but the situation in Austria is much more severe.
It's ugly out there:
http://seekerblog.com/archives/20090222/eastern-europe-meltdown-impact-o...
what I know is that Austrian Banks are
strong in Yen lending. I know that in Switzerland,
where rates are incredibly low, people started to
lend in Yen, with Austrian Banks, because they thougth
they could make money in Yenswissi, because the Yen
fell. Once the big deleverage started, yenswissi
jumped from 1,00 to almost 1,30 in a heart beat.
Our financial system is so fucked up, once the liquidity
of the central banks runs out, they will have to explain...
Closed system is the only thing that allows them to inflate. Any yuan to dollar conversion comes from printing or borrowing.
<remaining content removed by Sacrilege>
During the boom years, tons of credits have been
given to eastern europe in CHF. During the crisis,
CHF exploded to the upside, and thats a huge problem
for the debts in these eastern countries. Now they
have 50 % more debt, and pay 50 % more interest.
The Swiss Central Bank tried, during the past months,
to weaken the CHF, saying, it is for the interest of the
countries exports. But in reality, there is this huge
bubble of CHF credit, that has been placed abroad.
As long as we do not get the proof, that non swiss
start to take their money from swiss banks, it will be
The USD, that calls the shots.
At 78,5 & 77.5 stand the last good supports for the DXY,
The Swiss Central Bank is so small vs. the FED & EU central
banks, they would need ALL printing machines on the world
to weaken the currency at this point.
I am sorry, but I think this will end up in a mess, shouting and fingerpointing. If a year from now, the US finds it hasn't received enough information, it will be back to square one. However, the allegeded tax cheats may no longer be UBS customers at that point.
IMHO, the Swiss and the UBS government have just been had by UBS. I am not sure why Geithner and Merz would be so concerned about the health of UBS, this mafia-like institution can take care of itself.
Keep in mind that there is no statute of limitations on IRS faux pas, no right to a jury, and failing to report monies (not income) in foriegn holdings is a crime.
Exactly, if they are doing the job right they will be back.
"If"??? Of course the information the US receives will be useless. The lesson that we're learning and re-learning every day is that there are no penalties. Government is weak. Business is all powerful. Government knows this and so it pretends to be on the same side as business, but we all know the truth: Government is weak and pathetic and has no ability to counter the power of money.
from a Swiss to the IRS: FUCK YOU !!!
From a Sicilian to the IRS - FUCK YOU as well!
+100 dude
Short Switzerland, Long Panama. New Panamanian President and Finance Minister solid.
did he say we have to honor contracts ...LOL.
could those contracts be paid if it weren’t for the taxpayer’s money?
EDIT he=Arthur Levitt
The IRS - taking your money and letting the govt spend it for your benefit since 1913.
How exactly does this spell the end of "swiss bank secrecy" as the author claims? I don't see the direct relation between what is happening to UBS clients and the secrecy of other bank accounts in the country, especially in banks that are not international.
The CHF isn't going to crater. This ruling only applies to UBS. Most Swiss banks don't do business in the US and are not going to be subject to US law under any circumstances. This is a gift to the smaller private banks. They are already feeling the gains.
There is/has been alot of invalid reporting about the IRS/UBS debacle. The most exaggerated stories spawned have been saying that all USA citizens (including expatriates) will have to relinquish their bank accounts in foreign countries, especially Switzerland. This notion has not been verified ... but if anyone has any validation, please reply with references.
ahhh, the old systemic risk argument.
check out this bat-shit insane ( yet highly probable ) article from Denninger http://market-ticker.org/archives/1349-Depression-Assured-Maybe-Swine-Flu.html
wow, just, wow.
death rate from swine flu hasn't hit the UK that much.there are many cynics who allege that it's being used to cover up the scale of the global financial clusterfuck
Nah, someone is long NVAX.
Fewer than 10 percent; Swiss banking will not be decimated. The wording of the release, which is essentially "Look at what we did get!" makes it apparent we caved.
Those unfortunate and handpicked few will probably get off with a scolding after their lawyers argue that even Timmy knows how complicated and bothersome IRS rules can be. We know the moral hazard, but we may not have yet seen the legal hazard of appointing a confirmed tax cheat to head the IRS.
Would have thought this is great news for Lombard Odier and the other old reliables..?
One must wonder whether Tim himself is in the list? Otherwise why let the remaining circa 47500 fat taxpayers go? Maybe other notables from GS are also in the list? Inquiry minds want to know.
Rest assured that any sensitive and potentially embarrassing names to this administration will not make list released for the IRS.
How many in the senate and congress were on the list?
Well the banksters got away with holding the world to ransom didn't they?
Still going to get their big fat bonuses
"At what point with Tim Geithner show a modicum of backbone and actually do the right thing instead of bowing to pressure from any which direction? "
The answer, of course, is never. Geithner is a bureaucrat. He is simply doing what bureaucrats do, which is to say, bow to pressure from any which direction.
I beg to differ.
Geithner is a bought & paid for political appointee. The last thing Geithner can be called is a public servant. He has no idea what the term "loyalty to the institution" means in theory or practice.
Gotta love the Swiss, thieving bastards that they are. The gnomes will have to get busy pulling some more gold fillings from all the teeth in their vaults.
Where did they get those teeth?
Oh, right...
I bet that half of Congress, Greenspan and Bernankeare on the list. That would be the kindling we need for populist outrage.
Stall/5 year Statute of Limitations/Stall(worked for Tubo Timmy)/Stall/Money moved years already/Show small accounts/.
We here at UBS are delighted with the flexibility and sensability the IRS has shown. Releasing the names of all 52,000 of our clients accused of tax evasion would be devastating.
Executives, politicians, bankers, business owners, actors, musicians, professional athletes, and many more people would be outed. Most of these people are role models and their reputations should not be stained simply because of a bit of tax evasion.
In addition, such a scandal would make the headlines of the newspapers and tabloids for months to come. If you are tired of the media coverage of the death of Michael Jackson, this would be ten times worse. Ask yourself, is it really worth it to ruin the lives of these people?
Finally, I would also confirm that if UBS failed, it would indeed cause the collapse of the world economy. There would be great destitution that could not be undone. In other words, don't mess with UBS!
-- Phil
YOU all tend to forget that Tim geithner was a tax cheater to begin with. It seems to be ok that he "forgot" to pay taxes.
Once a crook, always a crook.
We have market liftoff...
AXL at full thrust
Probably all the names were released,however the treasury "convenietly" chose only 5000. Couldn't that also be the case?how do we know since it seems that this is a time for who do you know and where they are?
Yeee , sure... the core of the solution is the moral aspect of the possible consequences...
USD/CHF has been stuck in a range since mid-may. Next direction likely is up to 1.0950 levels. As for the person who said that most Swiss banks dont' do business in the US, he surely forgot Credit Suisse. UBS is not the only bank to work in the US.
Anyway, it's not what happened to those handful that will dictate the fund outflows from Switzlerland, but what the sentiment becomes of other offshore and numbered account holders regarding the safety issues of having an account in that country. Simples. Hunting after Switzerland is just another populist outrage. If they really want to get serious they should start looking at the Caymand Islands where a two thirds of the worlds wealth is parked in terms of legal jurisdiction.
This is "two birds with one stone" strategy - Get some money flowing into the depleted tax-reciept bucket. Plus what better way to distract the neo-cons from waging the anti-goverment media war - wonder if Rush Limbaugh is on the list ?. This is +1 for us commoners who gets the tax taken out right from the paychecks - anyway you look at it (That is if they collect on it - instead of this being just a political strategy)
Why don't they just release the names of these tax cheats to people who pay every dime like myself, and we'll take care of justice the old fashion way.
Giggity giggity
So only 10% of the tax evaders have to pay the price. I suppose we now know who the other 90% are....politicians and friends of politicians. I think UBS should have said "all or none!" Where do we get the full list?
What's the minimum threshold for opening an account with UBS? I figure those fat bankers from Swiss won't waste their precious time dealing with small account? One million minimum, anyone? Oh, yes, you and US and a minimum million dollars. I heard those fat UBS bankers would fly to the USA to meet the client. How much that would cost UBS?
It so happens that the number of richest people (minimum 10 million dollars) in the America rounded around 52,000.
Someone needs to ask Obama on national tv at a town hall how it was decided that 47,000 tax cheats needed to be protected while 5,000 will be dealt with. This is no different than bailing out the country's largest banks (the most responsible for our current situation) and letting the 80 or so banks that have failed this year go to the dogs.
Where is the transparency in this?
Remember Set Theory back in grade school?
The intersection between UBS rolls and DNC membership is 47,000.
Pretty simple, actually.
How about Marc Rich?
Those hackers who stole 130 million credit card numbers should put their skill in good use by hacking and disclosing the whole, nothing but the whole, list of 52000 accounts and using it as a bargain tool to commute their prison terms. Oh, my bad, that will increase their prison terms casue it is against the national interest.
Me thinks that story about the 130 million credit card numbers is total bullshit. It's just more propoganda for the gov to justify monitor everything internet -- to protect YOU of course.
As for those tax avoiders, hey how about starting with GS who apparently paid 1% tax on their income last quarter, which was done without cheating.
According to the Reuters story:
However, account-holders threatened with disclosure would be able to challenge the move in the Swiss courts, it said.
did he say we have to honor contracts ...LOL.
could those contracts be paid if it weren’t for the taxpayer’s money?
EDIT he=Arthur Levitt
?
Apparently there is no fucking moral hazard too hazardous for Geithner to navigate and brush under a rug. Fuck him for letting 90% of those tax cheats from getting away. Seriously, fuck him and the level of disgust I feel for him is unprecedented.
Keep in mind that though only 5k names will be turned over, probably twice that number of people will come forward before the disclosures are actually made as DOJ/IRS have promised lighter penalties and no criminal prosecution to those who come forward voluntarily.
Poll: You are one of the 52,000; you have 10 million tucked away at UBS (it's 85 percent of your net worth). There is a 5 in 52 chance that your name will be on the first disclosure. You have roughly one year to turn yourself in, pay about 70 percent of the 10 mill. and avoid prosecution. Do you do it, or do you try your luck? (penalty if caught=full forfeiture/felony tax evasion charge)
The amount of potential money owed on the 5,000 accounts probably exceeded the gross amount of deposits on the other 50,000+. No feather in no cap for anything under $2.3 billion due. There are only so many hours in a day. Probably half these people have one foot in the grave and the other on a banana peel. Not all US money in a Swiss account is illegal. A person's account may be in the mix of target accounts, but a check for a tax return listing the interest earned from the Swiss account and some foreign income earned would get a person removed from the list. Even though the income reported is less than 50% of what was actually earned.
The secrecy of the Swiss bank account was only in the movies.
Well put. But leaving some out also gives manuevering room for taking care of the Administration's own.
"The secrecy of the Swiss bank account was only in the movies"
Disagree; not *all* secret Swiss bank account's are equal ;)
Really, really want a super-crazed video game set in the Swiss bank dunge---er, vaults. You know, piles of gold, famous dead peoples' brains, gnomes with UZIs...
This could hit UBS quite a lot. 52,000 potential accounts (circa 5,000 confirmed). They are private banking, so I will venture that $500k is a fair number for each
52k x $500k = $26 Billion
Assuming 100% drawdown, you are talking about 10% of UBS deposit base leaving. Depending on the unwind period that is dangerously close to bank-run levels.
I bet you Hank Paulson, along with other government thiefs and politicians are on the list, and theirs are NOT one the ones being disclosed.
The 5,000 that are being given up (there is no evidence other than a statement that these are the largest 5,000) will fight the disclosure in Swiss Courts forever.
This is the tip of the iceberg anyway. How many more banks in tax havens are holding hundreds of billions? Lichtenstein, Cayman Islands, Bahamas, Singapore?
Swiss bank secrecy had passed away some years ago for foreigner account holders.
In Switzerland tax cheating by "forgetting" to list certain income is not a felony (however active wrong statements are).
When they caved in, I believe to EU pressure, to allow foreign prosecutors to request disclosure if they strongly suspected a felony *according to foreign law*, the Swiss bank secrecy had died. The stated ability to challenge disclosure in the Swiss courts is just a fig leaf on that.
However I suspect the biggest fish are smart enough not to keep hidden wealth in an account of an internationally operating bank, but prefer a local only private bank. So the results will neither show in a big catch for IRS and US government nor cause a CHF breakdown.
Oh NOES. If 52,000 tax cheats were actually forced to pay their taxes the world would end.
Mr. Geithner, please stand up and wipe the Vaseline off your anus. As much as we enjoy the idea of you bending over for 52,000 of our fellow Americans, we'd like you to do something novel and actually pretend that you're an honest man.
Tell UBS to fuck off and die. Believe me, the world will recover. In fact, the world will recover from any failed institution. What will never, ever recover is your credibility if you continue to smoke banker cock.
Stop the presses TD!!!
Boomberg: Swiss Government Decides to Sell Stake in UBS Immediately
http://bloomberg.com/apps/news?pid=20601087&sid=ahHxThBKIivc
Is UBS still one of the largest counterparties for derivative transations? What can happen if 10% of the deposit base flees / is prosecuted, while the remaining 90% wonders if they are next. While at the same time the government dumps 6 billion CHF of in shares (about 10% of marketcap)
The Swiss Gov. just sold it's UBS stake, to Investors
swiss newspapers reporting.
After Stock Markets where able to rebound between 50 & 100 %
from their march09 lows, UBS lost about 3Bln swissis
in H1. There is still no E below the P, but so called Investors
are willing to buy that crap.
The Gov. held about 9 % of the company, so it will be
interesting to see who owns more than 3 % now, since
it has to be disclosed to public
not sure it really kills the CHF, i dont know that american, russian, etc accts are held in CHF vs USD, EUR etc. depositors can hold the funds in the currency of their choice (likely $ for Americans and for many others). It should, however, be bad for the banks so if youre going to short anything, id be shorting the swiss banks not the currency. if the acct are moved to the Caymans, no one is going to convert from CHF/USD/EUR to the KYD! if you think the CHF is going down then load up on the KYD instead!
Before this, it was extremely difficult for Americans to open a swiss bank account. Most banks put us in the same category as Nigeria and Columbia (!), and refused all American accounts, regardless. A few banks allowed you to open an account if you showed up in person with $500,000 in a negotiable instrument (cashiers check or cash). Also certain 'very secret' accounts could not be opened by Americans at all.
After this debacle I would not be surprised if the few remaining banks are closed all new accounts by Americans. If this deal applies only to suspected felons (drug dealers, terrorists, arms dealers, etc.) then the swiss will probably allow existing American accounts to remain. But if this deal "forces" swiss banks to disclose information about simple American tax cheats (not an illegal act in switzerland), I would expect them to close all American accounts, across the board.
No accounts means no reporting requirement.
Secrecy is woven into the swiss banking system through their constitution. They acquiesced to reporting on suspected terrorists, but it is still central to their banking laws to keep as much information private as possible.
As far as UBS taking the system down if all 52,000 accounts were divulged, that's scary. Perhaps they would have forced all those accounts out of switzerland, which would have put UBS into insolvency with too few reserves. In that case it's probably insolvent anyway, but can still pretend it isn't. This stuff is getting really strange.
You do not understand the subtlety of this.
Any tax on production, whether on employers or the employed in the supply chain, is mirrored as a cost to the consumer. Employers and the employed are merely involuntary tax collectors taking money from consumers and passing it on to government. Effectively, this produces a general tax on consumption that we pay out of our real disposable income when we spend, and no one escapes it, rich or poor.
Paradoxically, in this way the consumer benefits by executive tax avoidance because the cost of executives paying taxes would otherwise appear in consumer prices. You could say that the executives pocket the tax saving and keep selling prices high, but that assumes that market forces between executive pay and consumer prices are suspended throughout industry.