January 3, 2014
Swiss Banks Scramble to Meet DOJ Disclosure Deadline
Swiss banks are moving as quickly as possible to inspect account data with masses of lawyers and auditors at their sides in an attempt to meet a 31 December deadline set by the US Justice Department on an amnesty for institutions who admit to breaking America’s tax laws. Under this program, Switzerland’s banks who believe they may have violated US tax laws must reveal hidden American assets to the US Internal Revenue Service (IRS), hand over those accounts, and pay whatever penalties may follow. In exchange for their cooperation, the US Justice Department will drop all charges against the banks.
“It’s necessary for the banks to do a deep analysis of their clients and the history of those relationships,” Swiss Bankers Association (SBA) spokeswoman Sindy Schmiegel told Bloomberg.
“That’s really expensive, and that’s why the program is at the limit of tolerability for the banks. It’s really a painful program.”
At this point, the program has gained 33 Swiss banks. These banks have agreed to pay the IRS 20% of the value of undeclared accounts set up before August 1, 2008. Any accounts set up between then and February 2009 will be required to pay a 30% penalty, which will increase to 50% after that time.
In a controversial move, the Swiss government has backed the US program and has even encouraged its banks to sign up for the program, claiming that doing so would promote cooperation between itself and the US.
“In addition to strengthening our partnership with the Swiss government, the program’s requirement that Swiss banks provide detailed account information will improve our ability to bring tax dollars back to the US treasury from across the globe,” US Attorney General Eric Holder said when launching the program in August.