by Kyle Colona on March 6, 2012
The US efforts to find tax evaders lurking in once untouchable Swiss banks accounts took a giant leap forward yesterday as the Swiss Parliament agreed to amend a tax treaty with America that will give the Feds access to more detailed info in their efforts to capture US taxpayers with undeclared accounts.
The keyword there is undeclared since storing cash in Swiss banks is permissible as long as those accounts are disclosed. While this is a play usually for wealthy investors seeking to mitigate risk from a bank crisis or to take advantage of currency valuations, parking cash in undisclosed accounts has always been a no-no under the IRS Code, but Swiss Banks had previously relied on their own bank secrecy laws to protect these investors.
But all good things come to an end, and the tax cheaters are going to be coming home to roost if they get caught up in this amended treaty; albeit such players have been offered amnesty by the Treasury Department and the Internal Revenue Service. Be that as it may the Wall Street Journal notes that lawmakers in Switzerland “hope the change will help end a years’ long tax battle and lessen U.S. pressure on some Swiss banks.”
“We expect that this amendment will pave the way for the treaty and bring us closer to a global agreement with the U.S. about the Swiss financial center,” Federal President Eveline Widmer-Schlumpf said after the decision.
In a related story, Reuters reports that the proposal clarifies how Switzerland would fork over information on American investors “suspected of dodging taxes at home.” Moreover, this action will serve to backstop an anticipated deal between US watchdogs and 11 Swiss firms.
In sum, Switzerland’s lower house passed the proposal by 110 votes to 56 votes, while the upper house passed the plan in December which made yesterday’s vote a fait accompli for all intents and purposes. In particular, the plan requires Switzerland to hand over data on suspected tax evaders, “even if U.S. tax authorities cannot identify alleged offenders by name or bank account.”
In the final analysis the vote is said to be a weakening of Switzerland’s “long-cherished secrecy laws,” as these laws have been the bedrock of the nation’s finance sector. Finally, Congressional lawmakers also need to approve the deal before it is sealed, but given the political climate in the US, this should be a rare occasion of bi-partisan cooperation.
Kyle Colona is a New York based freelance writer and a Feature Writer for the Compliance Exchange and Wall Street Job Report. He has an extensive background in legal and regulatory affairs in the financial services sector and his work has appeared in a variety of print and on-line publications.