UBS Sued by Couple Over Disclosure of Wife’s Account to IRS
(Bloomberg) -- UBS Group AG was sued by a couple who said the Swiss bank should not have disclosed the wife’s account information to the Internal Revenue Service because she was not a U.S. citizen.
Jonathan and Esther Zuhovitsky said in a suit filed Wednesday in Manhattan federal court that they endured an intense audit as result of the disclosure and at one point were even referred for prosecution by the IRS criminal division, though no charges were ultimately filed and they escaped having to pay millions of dollars in penalties.
Once a byword for hidden wealth, Swiss bank accounts were aggressively targeted by U.S. tax authorities in the 2000s. UBS paid a $780 million fine to the U.S. in 2009 for aiding tax evasion by US citizens and disclosed the identities of thousands of American account holders.
The Zuhovitskys claim in their suit that the U.S. crackdown shouldn’t have applied to them. Though Jonathan Zuhovitsky is a naturalized U.S. citizen who held power of attorney over the account, his wife is a citizen of Israel and Austria who has never lived in the U.S.
Moreover, the funds in the account were Esther Zuhovitsky’s inheritance, they said, and her husband had no beneficial ownership or rights to them. He managed the account only because she suffered from dyslexia.
UBS declined to comment on the suit.
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