In the last few years, the IRS has offered two well publicized amnesty programs for the disclosure of offshore accounts. Many taxpayers have participated in these voluntary disclosure initiatives, seeking to avoid potential tax evasion charges.
But many taxpayers with foreign accounts did not participate. In Southern California and across the nation, numerous taxpayers with these accounts are still struggling to decide whether to come forward.
A recent decision by Swiss authorities regarding the cooperation of Swiss banks with American tax evasion investigations may help some U.S. taxpayers make this decision.
This week, the Swiss government said it would allow Swiss banks to provide U.S. investigators with broad statistical data about American clients. Even more importantly, the Swiss government will permit U.S. investigators to ask Swiss banks for specific details about accounts held by American taxpayers.
To be sure, in order for U.S. requests for taxpayer-specific data to carry full force, an additional procedural step would be needed. That step is a tax treaty between Switzerland and the U.S. that would formalize account disclosure responsibilities for foreign financial institutions.
Such a treaty, however, may not be too far away. Swiss authorities have already indicated their interest. And their U.S. counterparts have been working to lay the groundwork with tax treaties not only with Switzerland, but also many other countries.
These treaties are part of American efforts to fully implement the requirements of the Foreign Account Tax Compliance Act (FATCA). FATCA, a sweeping new law aimed at offshore account tax evasion, is due to take effect next year.
In short, the Swiss action this week further weakens Switzerland’s historic bank secrecy protections. And making American accounts in Swiss banks more transparent is likely to drive further interest in the disclosure of those accounts.
Source: “Got a Swiss bank account? Time to fess up.,” CNN Money, Lnnley Browning, May 30, 2013