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Offshore accounts: tug-of-war between U.S. and Swiss continues

In their jousting matches, medieval knights knew how to settle things in a very simple way. It was always pretty clear whether someone had been knocked off their horse or not.

But we live in a very different society now, in which getting to the heart of a complicated matter can be like peeling back layers of an onion.

And so, for example, U.S. authorities are trying to peel back the layers of secrecy that have historically shrouded Swiss bank accounts. In this post, we will update you on another new development in this multi-layered tug of war.

The U.S. Senate has not been content to leave all of the responsibility for offshore account enforcement solely to the Justice Department or the IRS. As we noted in our February 26 post, a key Senate subcommittee held a hearing last month that focused on the role of Swiss banks in allegedly facilitating tax evasion by U.S. taxpayers.

That hearing zeroed in on one Swiss bank in particular: Credit Suisse. Using a rather melodramatic phrase, Sen. Carl Levin told a Credit Suisse executive that "the jig is up" on using Swiss accounts to shield U.S. taxpayers from tax on their offshore earnings.

This month, Sen. Levin fired another shot across the Swiss banking brow.

Sen. Levin and his subcommittee co-chair, Sen. John McCain, have asked the U.S. Justice Department to seek extradition of Swiss financial professionals who allegedly facilitated tax evasion by U.S. taxpayers.

As we noted in our March 14 post, there has already been one guilty plea by a former Swiss banker in connection with charges of conspiracy and tax evasion. But Sens. Levin and McCain are trying to get the Justice Department to take action to extradite many others.

There are more than 50 foreign financial professionals - bankers and financial advisers - who have been indicted in the U.S.

Of course, each one of those cases must be considered on its own terms. In our adversarial system, that brings the jousting imagery that we opened with back to mind.

Overall, however, the issues involved in offshore cases are generally very complicated. As we have discussed repeatedly in this blog, the advent of the Foreign Account Tax Compliance Act (FATACA) has added entirely new layers of complexity.

Source: The Washington Post, "Levin and McCain to DOJ: Extradite Swiss Bankers," Danielle Douglas, March 19, 2014

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