Daily Tax Update - February 20, 2009

SENATE SUBCOMMITTEE ON INVESTIGATIONS RESCHEDULES HEARING ON TAX HAVEN BANKS:   The Senate Permanent Subcommittee on Investigations has rescheduled a hearing for March 4th titled, “Tax Haven Banks and US Tax Compliance - Obtaining the Names of US Clients with Swiss Accounts.” The hearing was originally scheduled for February 24th. Subcommittee staff said that the hearing was postponed due to scheduling conflicts and not related to the recent legal issues pertaining to UBS. 

  • According to an earlier release by the Committee, “This hearing will continue the Subcommittee’s examination of financial institutions which are located in offshore tax havens and which use practices that facilitate tax evasion and other misconduct by US clients. One of the banks featured in a July 2008 hearing on this topic is UBS, a major financial institution headquartered in Switzerland. The hearing will examine issues related to a John Doe summons served by the IRS on UBS seeking the names of US clients with UBS Swiss accounts that have not been disclosed to the IRS. In July, UBS representatives estimated that about 19,000 US clients had about $18 billion in assets in such Swiss accounts. UBS stated at the July 2008 hearing that it would cooperate with the IRS summons, but to date virtually none of the requested information has been provided to either the IRS or the US Department of Justice which is also examining the matter. The hearing will examine the status of the information exchange, the role of US-Swiss tax and legal assistance treaties, and the effect of Swiss secrecy laws on the information requests.” A witness list will be available later.
  • Yesterday, the Department of Justice asked a Florida district court to enforce a John Doe summons seeking the names of as many as 52,000 US investors with undeclared accounts at UBS. IRS Commissioner Doug Shulman said, “We are committed to moving forward with the summons enforcement process. This action sends a strong signal to taxpayers hiding their money offshore. The IRS will be aggressive in pursuing people who shirk their obligations under the tax law. These people owe it to their fellow citizens to pay their fair share of taxes. As Commissioner, I am committed to bringing to bear the full arsenal of IRS resources to pursue egregious offshore tax abuse.  International tax issues are a top priority, and we will continue to aggressively pursue people hiding assets offshore. For people who are hiding money offshore, this serves as a wake-up call that they need to get right with their government. Taxpayers should talk to a tax professional and come forward under our voluntary disclosure process. Having the IRS find you could mean a much heavier price than coming forward on your own.”
  • The Justice Department’s press release can be accessed here.

MISCELLANEOUS GUIDANCE ISSUED TODAY:
Notice 2009-19 invites public comments regarding guidance to be provided persons who will be required to file information returns under section 6050W of the Internal Revenue Code. Section 6050W requires information returns to be made for each calendar year by merchant acquiring entities and third party settlement organizations with respect to payments made in settlement of payment card transactions and third party payment network transactions occurring in that calendar year. This requirement to make information returns applies to returns for calendar years beginning after December 31, 2010.

INTERNAL REVENUE SERVICE - CIRCULAR 230 DISCLOSURE:
As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

STEPTOE & JOHNSON LLP - TAX PRACTICE
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