Swiss-based UBS said it will notify those of its clients whose names are to be disclosed.
Today’s settlement, which had been anticipated for weeks, is seen as yet another landmark event in a seemingly inexorable march on the world’s most secretive financial centres, as deficit-burdened countries like the US seek to put an end to the ability of wealthy residents to avoid their tax obligations.
It is thought likely that other countries may seek to use today’s agreement as a precedent to enable them to obtain details of the bank accounts of their own citizens.
Frank Strachan, Grant Thornton national tax investigations senior manager, said: "Where the US tax authorities lead, other countries’ tax authorities tend to follow."
Still time to come forward
Those who suspect they may be on the list and who know they have unpaid tax due may reduce their penalties and possible prosecution by coming forward under an ongoing voluntary disclosure arrangement that is due to end on 23 September, the IRS said in a statement.
It added that as a result of this agreement, it expects to receive information on "substantially all" of the accounts in which it was interested.
Deal terms
Under the agreement, the IRS will submit a request to the Swiss government describing the accounts about which it is seeking information. The Swiss government will then direct UBS to initiate procedures to turn over information on thousands of accounts to the IRS.
The IRS said it will be asking for information from UBS on a range of account types, including bank-only accounts, custody accounts in which securities or other investment assets were held, and offshore company nominee accounts, through which an individual indirectly holds beneficial ownership.
Also as part of the deal, the Swiss government has agreed to work with other Swiss banks to review and process additional requests for information about their American account-holders.
The US continues to retain the right to resume its legal efforts if it is not satisfied with the results of the current agreement.
The settlement ends a battle that began in February, when the US Justice Department took legal action to force UBS to hand over the names and account details of more than 50,000 Americans. The move stunned Switzerland, where banking secrecy historically has been enshrined in law, and caused other Swiss banks to become wary of having Americans as clients.
Under today’s agreement, UBS is not obliged to pay any fines. It paid $780m in a settlement of criminal charges back in February.
