Over the past few years, the federal government and the Internal Revenue Service have spent considerable time, resources and energy in uncovering instances of offshore tax evasion. As recent posts on our California blog and news stories indicate, the IRS is making headway with the Swiss government. Now other nations are getting into the act.
Last week, word broke that Germany and France were following the IRS's lead in cracking down on their taxpayers who hid assets in Swiss accounts to avoid taxes. French authorities gathered information from UBS branches in three cities in France. UBS has been one of the more prominent Swiss banks in the IRS's effort to combat overseas tax evasion. It has already handed over account information on thousands of U.S. taxpayers who hold or held accounts there.
By contrast, Germany is investigating Credit Suisse, another large Swiss bank that the U.S. is also currently examining. Just as UBS paid a fine to the U.S., so too did Credit Suisse hand over approximately $180 million to German authorities as part of that country's offshore tax probe. The German and Swiss governments have also reached an agreement that would impose taxes on funds placed in Swiss bank accounts by German citizens.
Under pressure from an increasing number of governments, it appears that the long-standing veil of secrecy that has shrouded the Swiss banking industry may be lifting. With the Swiss evincing the willingness to cooperate more with the IRS and other taxing authorities, it is important for taxpayers to know what they must do to comply with the complex reporting rules required of those who hold offshore accounts.
Source: Reuters, "Germany, France raid Swiss clients, banks on tax," Katharina Bart and Arno Schuetze, July 11, 2012.