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February 6, 2014


Swiss Banks Prepare to Strike a Deal with U.S. Regulators

More than 100 Swiss banks and other financial institutions are expected to seek non-prosecution agreements and provide U.S. authorities with information regarding clients suspected of offshore tax evasion. The announcement, given by Assistant Attorney General Kathryn Keneally, gave insight as to exactly how many Swiss banks are expected reveal how they assisted U.S. clients evade taxes, provide financial data about those clients, and pay any fines that may come as a result.

Keneally made the announcement at the winter meeting of the American Bar Association’s tax section in Phoenix.

The submissions of these 106 Swiss financial institutions signifies a gaping hole in traditional Swiss banking secrecy and represents the latest expansion in the Department of Justice’s and IRS’ five year effort to identify and prosecute the owners of offshore accounts secretly controlled by Americans.

“It will probably force people who didn’t take advantage of previous (tax leniency) offers by the IRS and ignored all the warnings to finally come forward and try to enter the program,” said Martin Press, a tax law expert at the Gunster law firm in Fort Lauderdale.

However, once federal investigators obtain evidence regarding suspected tax violators, they are unable to qualify for leniency.

The two nations reached an agreement last year on the basis that Swiss banks would be able to settle suspicions that they helped clients dodge the IRS. Switzerland, known for its stark independence, had previously opposed such agreements on the grounds that they would be in violation of the country’s bank secrecy laws. The pressure to comply increased last year after Swiss bank Wegelin & Co. pleaded guilty in January to a U.S. criminal indictment that accused it of aiding its American clients to hide more than $1.2 billion from the IRS. The bank was unable to keep its doors open after paying nearly $57.9 million in combined restitution, fine, and forfeiture.

As the Dec. 31 filing deadline neared, Keneally warned that Swiss banks involved in helping U.S. tax evaders face “significant risks” of being “targeted and prosecuted.”

Source: McCoy, Kevin, “Swiss banks closer to deals in tax-evasion probe,” USA Today, January 25th, 2014

Offshore Accounts/International Tax Disputes