Reverberations of the IRS-UBS brouhaha are already being felt throughout the banking industry, according to Thomas Lys, Professor of Accounting and Information Management. In his audio appearance with the Northwestern News Feed, Lys hinted that this may be the first of many such actions by the IRS.
“It is the first step where the IRS is able to get cooperation from entities outside of it’s jurisdiction,” Lys said. “Switzerland has historically been the bastion of secrecy in financial matters, and now you have this big crack in this bastion.”
“All the large Swiss banks, the international ones, have curtailing their business relationships with U.S. taxpayers,” Lys said of the secret accounts. “They will not open a new account and they will try to bring to a close an existing account.”
While that seems like no way to treat a customer, the Swiss banks are faced with little choice given the alternatives. “If [UBS] were not to comply with the order,” Lys said, “then of course you can seize the assets in the U.S. Also, this is an international bank, and you can’t operate an international bank by avoiding the big money centers in the U.S.”
Customer service at UBS isn’t dead, though. If have a questionable account, the helpful folks in the bank’s legal department have posted a convenient form letter to take the hassle out of turning yourself in.