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At the center of Swiss secrecy

UBS has agreed to release details of 4,450 accounts suspected of holding American customers’ undeclared assets.

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UBS has agreed to release details of 4,450 accounts suspected of holding American customers’ undeclared assets.

Before boarding a plane to Zurich at the Atlanta airport, Tampa tax attorney William Sharp paused long enough to muse over the flood of recent news about UBS AG, the Swiss bankers to the wealthy.

The Internal Revenue Service is pursuing a historic crackdown on rich Americans hiding taxable money overseas. Suddenly, there's a huge backlog of big-bucks U.S. citizens eager for Sharp to cut a deal for them to get back in the good graces of the IRS.

"We're a seven-day-a-week law firm lately," Sharp said Tuesday in a phone interview before boarding the flight to Switzerland. It's a trip he makes every month.

"Like a lemon, the government will squeeze you in exchange for more lenient sentencing," he says. His job is to retain a few drops for wealthy clients via a temporary tax amnesty program.

For three decades Sharp, 56, has offered tax counsel to wealthy people, U.S. businesses expanding overseas and foreign firms coming to the United States. Sharp says he's never seen such media attention, given the steady flow of calls he gets from the Wall Street Journal, New York Times, and USA Today, among others in the media. But he understands why.

On Wednesday, after more than a year of international negotiations and federal arm-twisting, Swiss bank UBS AG agreed to turn over to the IRS the details of 4,450 once-secret accounts suspected of holding undeclared assets by American customers. The accounts held $18 billion in assets at one time. Many have since been closed.

The unveiling of those accounts is part of a bigger U.S.-Swiss tax-evasion settlement and investigation that could produce as many as 10,000 account identities. UBS reportedly held 52,000 U.S. client accounts.

"This is no mere keyhole into the hidden world of bank secrecy," IRS Commissioner Doug Shulman said Wednesday. "This agreement represents a major step forward with the IRS' efforts to pierce the veil of bank secrecy and combat offshore tax evasion. It's a historic development in our international efforts, and it helps build a solid foundation for addressing future offshore issues."

Sharp, who now represents more than a few of those 10,000 secret account holders, agrees. Swiss banking secrecy — at least for Americans — is pretty much kaput, he says.

Wealthy American clients of UBS used sham corporations set up in havens like Hong Kong and the British Virgin Islands to help evade U.S. taxes. Sharp says UBS, Switzerland's largest bank, long ago saw the profit potential of pitching Swiss secrecy to rich Americans easily motivated to hide their taxable assets. UBS lavished its attentions on the wealthiest parts of the country — especially affluent retiree havens in Florida like Palm Beach and Naples, as well as in New York.

Sharp, the named partner of the 15-member Sharp & Associates, PA law firm, calls UBS' intensive advertising methods "carpet bombing marketing."

Secret bank accounts? International tax evasion? Swiss banking mystique?

"It's been going for at least 20 years," Sharp says, amused, "and nobody cared."

Now they do. Sharp rattles off the recent efforts by the G-20 — the Group of 20 representing the world's largest economies — to crack down on tax evasion, as well as "new toughness" from the Obama administration and IRS Commissioner Shulman's priority of pursuing overseas tax havens.

One UBS banker, a 44-year-old American named Bradley Birkenfeld, blew the whistle on his Swiss employer after he was caught smuggling diamonds in a tube of toothpaste into the country for a Californian client. Birkenfeld is scheduled to be sentenced on Friday in Fort Lauderdale.

This all may be just the start. The Wall Street Journal reports wealthy Americans have identified 10 Swiss and other European banks where their accounts are held.

That means fresh targets for an IRS motivated to capture every tax dollar it can find. And for Tampa attorney Sharp, an even bigger backlog of rich Americans scrambling to make nice with the taxman.

Robert Trigaux can be reached at [email protected]

At the center of Swiss secrecy 08/19/09 [Last modified: Thursday, August 20, 2009 9:26am]
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