US Targets Other Banks

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After the IRS had made settlement with UBS over the disclosure of information on thousands of suspected tax evaders holding UBS bank accounts, the agency is now looking at investigating similar cases in other Swiss banks. According to IRS Commissioner Doug Shulman, the IRS intends to go after other banks, law firms and entities that help Americans place their cash in offshore accounts without paying taxes.

However, Michael Ambuehl, chief negotiator on behalf of the Swiss government in the settlement stated that a similar arrangement with other banks would be ‘questionable’ since UBS is the only bank that admitted liability in illegally helping US depositors stash their cash with them. It is estimated that tax evasion in offshore accounts deprive the US government of some $100 billion each year.

Under what the Swiss Foreign Minister Micheline Calmy-Rey called a ‘peace treaty’, UBS agreed to reveal information on 4,450 of its US bank accounts where there is suspicion of ‘tax fraud and the like’. The agreement involves UBS handing over details of the accounts to a Swiss government review panel who will decide on which data to hand over to the Americans. The account holders will be informed and be allowed to appeal. This process may take up to a year or more, according to the Swiss Justice Ministry spokesman, Folco Galli.

Due to the UBS case and increasing pressure from other European countries, the Swiss in March had to agree to adopt international banking standards for the exchange of information on tax evaders. Switzerland has also entered into new tax agreements with at least a dozen other governments to ensure the country is not blacklisted as a tax haven with the Organization for Economic Cooperation and Development. Germany is due to renew its agreement with the Swiss on September 8th. Last year German Finance Minister Peer Steinbrueck pressed for greater cooperation from the Swiss government in the battle against tax evasion. The German secret service even paid an informant for information on suspected German tax dodgers in Liechtenstein.

The American accord with the Swiss contains the term ‘tax fraud and the like’ which the agreements with other countries do not have. This is a significant factor in dealings with other countries besides the US. Ambuehl believes other countries would rather seek legal cooperation with the Swiss government rather than resort to legal action.

According to sources, Swiss banks hold $2 trillion in its accounts for overseas clients.


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