Former UBS client pleads guilty to offshore tax evasion

Richard Werdiger, a former client of Zurich-based UBS AG, has pleaded guilty to concealing assets from the IRS in offshore bank accounts.

The 63-year-old is one of 7 former UBS clients believed to have concealed over $100 million from the IRS. Werdiger was accused of hiding $7 million in 3 accounts in Panama and Lichtenstein.

The former UBS client has agreed to pay $3.5 million in civil penalties and faces up to 20 years in prison when he is sentenced on June 14. The accusations form part of a larger IRS crackdown on offshore tax evasion, which has previously made UBS a focus of interest.

UBS, Swiss and U.S. reach agreement on info about U.S. clients

UBS and the Swiss government have reached an agreement in principle with the U.S. to give the U.S. information about some American UBS clients who the U.S. maintains are evading taxes through accounts with the Swiss bank, according to media reports.

Reuters reported that, "A U.S. government source told Reuters on Friday he expected UBS not to pay a fine as part of the deal and Swiss newspapers reported the settlement would include the bank handing over 5,000 names of U.S. clients holding secret Swiss accounts -- about 10 percent of the names Washington was after."

The Wall Street Journal reported that UBS and the Swiss government had resolved their concerns about violating Swiss bank-privacy laws by combing through UBS client files and identifying "enough potential fraud to make them willing to hand over information about certain accounts.

"Swiss laws don't provide confidentiality if people engage in fraudulent activities such as setting up accounts with shell companies that lack any real business substance," The Wall Street Journal said.

Legal tactic helps uncover offshore bank accounts

The Washington Post features an article today about a special trial attorney at the Internal Revenue Service who is credited with devising a legal tactic for uncovering the identities of offshore account holders.

John McDougal and his team at the IRS began in 2002 to use "John Doe" summonses on U.S. companies that process financial transactions for Americans holding questionable foreign accounts.

"The summonses were instrumental in helping the Justice department secure a settlement under which UBS admitted engaging in a scheme aiding U.S. clients hiding income from the IRS," the article says.

Offshore-account holders struggle over tough choices

Facing an intensified government crackdown on offshore bank accounts, people who use those accounts to illegally hide their income are struggling over whether and how to turn themselves in, reports The Wall Street Journal.

Lawyers advising tax dodgers are saying their clients are struggling to decide among several alternatives. They can confess and plead for mercy. They can quietly file amended tax returns, pay up, make other required disclosures and hope overworked government prosecutors won't follow up. Or they could choose to do nothing and pray their names won't turn up.

The recently adopted law that increases the reward for whistleblowers who provide specific information to the Internal Revenue Service about tax avoidance schemes is encouraging whistleblowers to come forward.