MIAMI (AP) — Swiss banking giant UBS AG said turning over to the IRS the names of thousands of wealthy Americans who might be withholding billions in income from U.S. taxes would violate Swiss law and undermine international relations, according to a court brief filed Thursday.
The Internal Revenue Service has sued UBS to try and force the bank to turn over information about 52,000 account holders the agency says have an estimated $14.8 billion in assets and are using Swiss bank secrecy to shield the money. UBS asked that a Miami federal judge deny the IRS petition.
"There can be no question that the Swiss interest in enforcement of its financial privacy laws is strong and legitimate," the filing states. "In contrast to some other countries' financial privacy laws, the laws of Switzerland impose criminal, as opposed to merely civil, liability on those responsible for violations."
The IRS lawsuit, filed in Miami earlier this year, was accompanied by internal UBS e-mails, memos and other material that the IRS believes shows a systematic, long-term scheme by bank employees to help wealthy Americans evade income taxes.
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UBS also did not comply when a judge in July 2008 approved the summonses seeking the account information, and this lawsuit asks U.S. District Judge Alan S. Gold to enforce that earlier ruling.
"The brief filed by UBS demonstrates that enforcement of the summons would require UBS and its personnel to violate several provisions of Swiss criminal law," UBS spokeswoman Karina Byrne said in a statement.
Byrne said the "summons is incompatible" with the tax treaty between the two countries, which provides specific standards for government-to-government exchanges of information relating to taxes.
"UBS maintains that it has already sought in good faith to comply with the summons without violating Swiss law," Byrne said.
U.S. officials believe that an acquisition in 2000 of a U.S. company brought UBS a host of new American clients. The bank then set about to evade new reporting requirements for those clients. To do so, UBS executives helped U.S. taxpayers open new accounts in the names of sham entities.
The clients, in turn, filed false tax returns that omitted the income they earned in their Swiss accounts, according to the court papers.
February's lawsuit followed an agreement in which the Justice Department would defer criminal prosecution of UBS in exchange for the identities of up to 300 U.S. customers and payment by the bank of $780 million. That deal did not cover the list of 52,000 names now sought.
Government officials could not be reached for comment late Thursday.