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Time short to report UBS accounts

Bloomberg News / June 18, 2010

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WASHINGTON — US citizens and residents are racing the clock to report their secret UBS AG accounts to the Internal Revenue Service after the Swiss Parliament ratified an agreement to turn over the names of 4,450 bank clients, according to tax lawyers.

Swiss lawmakers yesterday ended a standoff and approved the bank’s settlement with the United States, clearing the way for the names to be transmitted to tax authorities as early as this week. Lawyers said Americans who ignored an IRS offer last year to reduce penalties in exchange for voluntary disclosures now are flooding their offices with calls seeking advice on how to avoid possible sanctions that could include prison sentences.

“For UBS account holders, they have mere hours to run to the IRS and hope they can disclose the account before the Swiss hand the data over,’’ said Asher Rubinstein, a partner at Rubinstein & Rubinstein LLP in New York who said he’s been “getting panicked calls all week.’’

The Parliament’s vote ends Switzerland’s long tradition of bank secrecy while securing an unprecedented victory for the IRS and US Department of Justice, which fought a two-year battle to gain access to the accounts. It also removes the threat of further civil litigation against Zurich-based UBS and additional fallout under criminal law.

IRS Commissioner Douglas Shulman said yesterday he expects the Swiss government to “move quickly’’ to transmit the information.

IRS spokesman Dean Patterson said that “even though the special provisions of the voluntary disclosure program are no longer available, it’s always a good idea for taxpayers to come forward on their own and disclose tax issues before we find them.’’

About 15,000 Americans voluntarily disclosed secret offshore bank accounts to the IRS last year, after the tax agency offered to reduce certain penalties and not seek criminal charges. The program ran from March to October.