UPDATE 1-IRS can seek UBS records for taxpayers hiding income at Wegelin
(Adds details of court order, background)
NEW YORK, Jan 28 (Reuters) - A federal judge on Monday authorized the Internal Revenue Service to seek records from UBS AG of U.S. taxpayers suspected of hiding their income in accounts with Swiss bank Wegelin.
Wegelin, the oldest Swiss private bank, pleaded guilty in Manhattan federal court on Jan. 3 to charges of helping wealthy Americans evade taxes through secret accounts and then announced it would close down as a result.
U.S. District Judge William Pauley in Manhattan granted the IRS' request to issue what is known as a "John Doe" summons, which seeks information about possible tax fraud committed by indivuduals whose identities are not known, on UBS for the names of taxpayers who may have hidden income at Wegelin and other Swiss banks.
According to the government, Wegelin and at least two other Swiss banks used a U.S. correspondent account at UBS to handle funds for American clients, a standard industry practice for foreign banks. By covertly transferring money from undeclared Swiss accounts, the bank allowed clients to avoid paying income taxes in the U.S., the government alleged.
Wegelin became the first foreign bank in recent memory to be indicted by U.S. authorities last February, marking the latest step in a broad probe into Swiss bank secrecy. As part of its guilty plea, the bank agreed to pay $57.8 million in fines after admitting to helping U.S. clients evade taxes on at least $1.2 billion for more than a decade.
UBS could not immediately be reached outside of regular business hours.
(Reporting by Joseph Ax; Editing by Tim Dobbyn, Bernard Orr)