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July 2, 2016


The other shoe drops: U.S. using Swiss data to look for offshore violations

“Waiting for the other shoe to drop” is a curious expression. It is an idiomatic way of expressing a sense of inevitability. The idea is that when one event in a linked-sequence happens, it’s just a matter of time before the next one follows.

This appears to be what’s happening now with U.S. authorities using information from Swiss banks to look for tax evasion by U.S. taxpayers through offshore accounts.

Of course, previous shoes have been dropping for several years now. The offshore enforcement crackdown by the U.S. goes back to 2009.

And the compliance challenges have become even greater with passage by Congress the Foreign Account Tax Compliance Act (FATCA) and the Treasury Department’s negotiation of numerous intergovernmental agreements to implement it.

Major Swiss banks such as UBS and Credit Suisse have paid major penalties for facilitating tax evasion by U.S. taxpayers. But it isn’t only giant Swiss banks have been succumbed to American pressure.

The number of Swiss banks that have been scrambling to resolve the Justice Department’s tax evasion concerns numbers in the triple digits. We discussed that in a post last year on non-prosecution agreements.

Many of those banks – about 80 – have now cut deals with the Justice Department. And as part of those deals, the Justice Department has gained access to data on the Swiss banks’ U.S. account holders.

For some taxpayers who have not entered a limited-amnesty voluntary disclosure program, the result of the U.S. scrutiny of data provided by Swiss banks could be tax evasion charges.

If you are uncertain about your compliance with offshore filing requirements, you should discuss your situation with an attorney knowledgeable about foreign account issues. After all, you don’t want to get hit by those dropping shoes.

Tax Evasion