King Kong vs. Godzilla

This case is of great importance, as the result of it could destroy the secrecy laws by witch Swiss banks operate.

NEW YORK—It’s a roller-coaster ride for Americans with Swiss bank accounts who are caught up in the tax-evasion case against UBS AG. Depending on what they have already told the Internal Revenue Service about their accounts, individuals are mostly at ease or deeply nervous about the prospect of civil and criminal penalties.

And, many are turning to tax advisers for help decoding the latest developments in a case that has taken dramatic turns in recent days.

Over the weekend, the U.S. Justice Department, the Swiss government and UBS said they are in talks to settle the case and asked a federal court in Miami to delay a highly anticipated hearing set for Monday. This followed a week of high-profile maneuvers by UBS and the Swiss government.

“It is King Kong versus Godzilla and they decided to take a time out,” says Bryan Skarlatos, a partner at New York law firm Kostelanetz & Fink.

The IRS crackdown, months’ long, has focused on people who hold U.S. securities in offshore accounts but don’t declare the accounts or pay taxes on income from the securities.

If UBS discloses names and information as part of a settlement, the IRS will “generally not accept a voluntary disclosure from anyone on that list,” says Mr. Michel. Further, he adds, a settlement in this case “could come any day and be accompanied by disclosure.” So, unless the IRS gives everyone until Sept. 23, the expiration date for a settlement initiative now in place, the window for voluntary disclosures may be closing fast for many.

Mr. Skarlatos says that, generally, account holders who have already made a clean breast to the IRS are sleeping soundly; others, who haven’t yet come forward, are on tenterhooks.

Most people with UBS accounts are very concerned, Mr. Skarlatos adds, while those with other Swiss bank accounts are less worried because they figure they still have time to come in even after the UBS case settles. “It is interesting to see how people handle the risks involved,” says Mr. Skarlatos. “Some can live with the uncertainty and others get very, very scared.”

In February, the DOJ sued UBS for access to some 52,000 accounts belonging to its U.S. clients, widening a probe that initially had targeted an estimated 19,000 accounts.

Read the article at Wall Street Journal.
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