The Internal Revenue Service and the Department of Justice are increasing the pressure on Swiss banks in their search for taxpayers who have used offshore bank accounts to shelter assets from taxation. It was revealed this week that five Swiss banks, including major financial institutions Julius Baer, Credit Suisse and HSBC turned over employee records and contact information to the U.S. government.
According to attorneys for the bank workers, the disclosure is an attempt to get into the U.S. government's good graces so that the banks can mitigate some of the heavy penalties they could be forced to pay for allegedly aiding in offshore tax evasion. In 2009, UBS avoided charges by paying $780 million and revealing that it had helped U.S. clients evade taxes.
A number of the bank employees have hired counsel because the release of information appears to violate Swiss law. Although Switzerland's Federal Council granted permission for the banks to disclose the employee data, the workers are arguing that it lacked the authority to suspend the application of a law that prevents companies from providing information that will be used in legal matters in other countries.
One Swiss lawyer has said that merely having their information in the hands of the U.S. government may be enough for bankers to refrain from contemplating helping U.S. taxpayers evade taxes. Even so, there are no guarantees that the IRS and the Department of Justice will not go further in their pursuit of tax evasion. Those who have non-compliant offshore accounts do have options to get back into compliance, and it is important that they understand the choices that can help them minimize any applicable penalties.
Source: San Francisco Chronicle, "HSBC, Credit Suisse Sacrifice Employees to U.S., Lawyers Say," Giles Broom, Aug. 16, 2012.