Recent Developments Pit the IRS Against Union Bank of Switzerland

London, United Kingdom (PressExposure) August 04, 2009 -- Recent Events regarding the US government and UBS or the Union Bank of Switzerland have shed a brighter light on Swiss banking laws and left many Americans scratching their heads. After all, in the US when the IRS and the Justice Department come knocking with regards to questionable financial matters, they always get their way.

The whole matter relates to a series of events that began to unfold back in the summer of 2008 when the US Justice department notified UBS officials that they had compiled solid evidence that indicated that they were knowingly and actively assisting wealthy US citizens hide some $200 million to avoid paying taxes on it.

UBS moved quickly to squash the matter by agreeing to a $780 million penalty and handing over the banking records of some 250 US citizens that the Department of Justice requested. At that point, for all practical purposes UBS considered the matter over and done with. However; they were soon discover that their problems with Uncle Sam were anything but over.

Fast forward to February 2009 and the US Justice Department comes knocking again at the door of UBS, only this time they have a list with some 52,000+ names of US citizens on it. They wanted their banking records handed over and claimed that they had all failed to pay a combined total of $15 million in US taxes.

Now Swiss government officials have had enough of the mess and stepped in to remind US officials that they were bound by the terms of a treaty between the two countries. A Treaty that dictates that these types of cases that involve the release of banking records be conducted on an individual basis. Also solid evidence of criminal wrongdoing must accompany each specific request.

Furthermore, the Swiss constitution provides protection for all individuals banking records inside their borders, be them Swiss or foreign. Hence; it would take a constitutional change or amendment to allow Union Bank of Switzerland to comply with the US Justice Departments request.

The Swiss it turns out view personal financial matters in what can best be described to Americans as the same way that they and the US government view religion. Finances are a personal matter and unless there is solid proof of criminal activity, the Swiss prefer to err on the side of personal privacy.

Its a system that works well for the Swiss, as they have one of highest rates of income tax compliance in the world. In short, they do pay their taxes even when banking regulations make Switzerland one of the easiest countries on the planet to avoid paying them.

Not to be outdone, Uncle Sam in a classic tit for tat maneuver tells UBS banking officials “ Fine! You do what you want inside your borders and we'll do what we want inside ours”. “We're seizing all Union Bank of Switzerland assets”! A move the has worked all to well on governments and business entities that have needed softening up in the past.

There is one problem this time though and that is that the Swiss aren't Iran or Pablo Escobar. They're heavily invested in businesses that span the entire diverse spectrum of the US economy. Pharmaceuticals, bioengineering research, chemical manufacturing etc. This means that in order for the US officials to follow through with their threat, they will have to throw untold thousands of US citizens out of their jobs. Real bad timing.

When contacted for his take on how this international Mexican stand-off will eventually pan out, Peter Macfarlane, CEO of which specializes in Offshore Banking did have this to say. “Its definitely a situation that isn't going to just go away.” “Its a simple sign of the times....Our government keeps on spending and spending and it's flat running out of money. Not only are we going to see taxes increase in the future but enforcement measures are going to become more draconian as well.”

On a further note: While the case is being wrangled out in Federal court, a US district judge has put the matter off until August 3, to allow both sides time to reach an amicable agreement.

About Q Wealth Limited

Contact Person: Peter Macfarlane
Company Name: Q Wealth Limited
Telephone Number: +44 20 3384 1993
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Press Release Submitted On: August 04, 2009 at 1:13 am
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