James F. McDonough
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Court Rules UBS Owes No Money to "Tax Cheats"
Author: James F. McDonough
Date: February 13, 2013
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UBS will not be required to pay damages to U.S. clients who were caught for tax law violations and forced to pay back taxes, interest, and penalties to the Internal Revenue Service.
The 7th U.S. Circuit Court of Appeals in Chicago handed down the ruling, and scolded the “tax cheats” for seeking recovery in the “travesty” of a lawsuit, according to Reuters. Matthew Thomas, Himanshu Patel, and Mathilde Guetta, three former bank clients, brought the suit against UBS claiming that the Swiss bank did not meet its obligation to inform them that they had to declare their accounts to the IRS and pay any taxes owed. The clients eventually chose to participate in the IRS’ Voluntary Disclosure Program, and were required to pay their taxes plus interest and a 20 percent penalty.
The case was first brought before U.S. District Judge John Darrah, who dismissed the case last June. In the most recent ruling, the court asserted that no breach of contract or failure to perform fiduciary responsibilities existed on the part of UBS.
“The plaintiffs are tax cheats, and it is very odd, to say the least, for tax cheats to seek to recover their penalties from the source, in this case UBS, of the income concealed from the IRS,” U.S. Circuit Judge Richard Posner wrote in the ruling, according to Bloomberg. “This lawsuit, including the appeal, is a travesty.”
In 2009, UBS faced punishment for its admitted role in helping thousands of U.S. clients evade taxes and hide income in offshore accounts. Although no criminal charges were pursued, the Swiss bank was forced to pay a settlement of $780 million to avoid further prosecution. It has since released thousands of names and account information on U.S. accounts.
- Practices: Tax and Trusts & Estates
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
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