Tom Bawden, New York
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America’s Internal Revenue Service (IRS) has solicited the help of some of the world’s biggest accountants to help broaden its campaign against tax dodgers, two days after securing the unprecedented backing of a federal court to track down UBS customers suspected of evading US taxes.
The IRS has scheduled a conference call for Tuesday, with accountants such as Ernst & Young and PricewaterhouseCoopers, to agree ways in which their auditing departments can aid the American government’s quest to clamp down on tax evasion by US citizens. The US government believe tax dodgers are costing the country hundreds of millions of dollars a year in lost revenues.
"We are concerned generally by what we are seeing and hearing" about the way some foreign banks are behaving with relation to the payment of US taxes by their customers, Barry Shott, a deputy IRS commissioner in charge of international taxes, wrote in an email to the six firms.
The IRS declined to comment on next week’s conference call, which is also thought to include Deloitte & Touche, Grant Thornton, KPMG and BDO Seidman.
Although auditors are not responsible for pursuing suspected cases of tax fraud the IRS is keen to involve them more directly in its clampdown.
It is understood that next week’s call will centre on how the auditors can help the US government to make its ongoing "Qualified Intermediary" programme more effective. Under the programme, set up in 2000, foreign banks operating in the US hand over the names and details of customers in return for lenient treatment on their taxes. In 2003, the most recent year for which there is data, $5 billion in taxes was retrieved from US citizens as a result of the programme.
The IRS was emboldened in its pursuit of tax evaders on Tuesday when a federal court took the unprecedented step of demanding that UBS hand over the names of as many as 20,000 of its US customers.
A federal judge in Miami issued an order authorising the IRS to retrieve from UBS information about US taxpayers who may be using Swiss accounts to evade income taxes.
The order directs UBS to produce records identifying US taxpayers with accounts in Switzerland who have elected to have their accounts remain hidden from the IRS.
The US Government’s Justice Department believes that as many as 20,000 UBS customers collectively have about $20 billion in assets in "undeclared" accounts and that the bank has helped them avoid about $300 million in taxes.
In a statement that foreshadowed the arrangement of Tuesday’s conference call, Doug Shulman, the IRS commissioner, welcomed the ruling: "The order clears the way for the IRS to take steps against wealthy individuals who don’t pay their taxes. People should take notice that the secrecy surrounding these accounts is rapidly fading."
UBS said that it would work closely with the IRS to address the summons but hinted that the release of the names was still not a foregone conclusion because of the need for it to comply with Swiss law, which prohibit banks to disclose confidential information without client approval.
In a statement, the bank said: "UBS takes this matter very seriously and is working diligently with both Swiss and US government authorities, consistent with Swiss law and the legal frameworks for intergovernmental cooperation and assistance."
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