Representatives from Credit Suisse AG, the second-largest bank in Switzerland, have indicated that the bank would hand over the names of U.S. clients suspected of offshore tax evasion to the Internal Revenue Service in response to a second request from the IRS.
A letter, on Credit Suisse letterhead, received by an affected U.S. taxpayer on November 2, 2011, confirmed the request by the IRS. The letter stated the IRS had formally requested the names and account information of U.S. taxpayers who held accounts from 2002 through 2010. “In connection with the IRS treaty request, the Swiss Federal Tax Administration (SFTA) has issued an order directing Credit Suisse to submit responsive account information to the SFTA,” the letter said. “This order is immediately executable and Credit Suisse as an information holder has no right to appeal.”
This is after UBS AG, Switzerland’s largest bank, turned over the name of more than 4,000 account holders suspected of U.S. offshore tax evasion in 2009. The move by Credit Suisse is the latest turn in the face-off between the United States and the tradition of Swiss banking secrecy.
Although it is unclear how many U.S. taxpayers will be further affected by this, it just signifies the determination of the United States to combat offshore tax evasion and get people back into the U.S. tax system. IRS Commissioner Doug Shulman has stated "Combating international tax evasion is a top priority for the IRS.”
U.S. authorities suspect tens of thousands of wealthy Americans of evading billions of dollars in taxes through Swiss private banks in recent years and are conducting a widening criminal investigation into Swiss banks. The Swiss government is also involved in negotiations that would cover a group of Swiss banks that have helped Americans evade taxes.
U.S. officials claim U.S. taxpayers have yet to declare the bulk of the wealth hidden in Swiss banks. The two recent IRS voluntary disclosure programs brought in only $2.7 billion from 30,000 American taxpayers with accounts in 140 countries and is suspected to merely be a fraction of the total still out there. Shulman believes that by piercing international bank secrecy laws the US can make a serious dent in offshore tax evasion.
There remains significant penalties and possible criminal prosecution for non compliance. The IRS is determined to continue to erode foreign bank secrecy.
If you believe you are at risk or if you have any questions concerning this article, please contact your Marcum International Tax Professional.