Hourglass Running Out of Sand for US Tax Dodgers With Swiss Accounts
End of year deadline for Swiss banks to sign on to deal to disclose tax evading Americans
Time is running out for Swiss banks to sign up to a deal with the U.S. that would allow them to avoid prosecution by outing American tax evaders.
Bloomberg explained that
Under the agreement, banks not already under U.S. investigation are able to disclose wrongdoing voluntarily and turn over account information on clients to avoid fines.
UBS AG (UBSN), Switzerland’s largest bank, avoided prosecution by paying $780 million in 2009, admitting it helped Americans evade taxes and handing over data on 4,500 accounts. Wegelin & Co., the oldest Swiss private bank, pleaded guilty in January and paid $74 million. It has since closed its doors. Since 2009, the U.S. has prosecuted 68 account holders and more than 30 banking professionals for offshore tax crimes.
The participating banks will categorize themselves, as the Wall Street Journal reported:
Category 2 banks expect they will disclose undeclared U.S. accounts and pay fines, while banks in the third and fourth categories will attempt to prove they haven’t helped Americans evade taxes.
Forbes adds that the banks "must reveal all cross-border activities and close the accounts of Americans evading taxes."
According to reporting by Reuters, about 100 Swiss banks are expected to sign on to the deal, which has a Dec. 31, 2013 deadline.
Politico obtained documents showing that some banks had issued letters to their U.S. clients encouraging them to come clean on their own before the banks are forced to fork over the clients' information under the terms of the deal.
“Your account information may be subject to a treaty request from the United States to the Swiss Federal Tax Administration, which may result in your account information being turned over to the DOJ or IRS,” warned one by Cornèr Bank, sent to an American client and obtained by POLITICO. “A disclosure … can be used by US authorities for law enforcement actions, including … criminal proceedings.”
“If someone had an account in Switzerland, it is beyond foolish to think that that account is going to remain secret,” Kathryn Keneally, assistant attorney general in the Justice Department’s tax division, said in September. “In the last five years, we’ve seen a remarkable change in our ability to get information concerning Swiss bank accounts. It’s extraordinary. Switzerland is no longer a good place to hide assets for tax reasons.”