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Tax probe widened to 17 Swiss banks.

October 31, 2011

U.S. authorities have widened their investigation to 17 Swiss banks under scrutiny for possibly helping wealthy Americans dodge taxes, a Swiss newspaper reported, citing several financial sector sources.

Strict secrecy has helped Switzerland build up a $2 trillion offshore financial sector, and in recent years the country has faced an international campaign against tax evasion as cash-strapped governments seek to boost revenue.

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Credit Suisse is the formal target of an investigation in the United States and Julius Baer is also being probed. UBS, Switzerland's biggest bank, has already paid a big fine and was forced to reveal the names of some 4000 clients to U.S. authorities.

The German-language Handelszeitung said in a preview of its Thursday edition that 17 banks were under scrutiny, up from the previous figure of 11.

The Handelszeitung gave no further details.

For more information go to: http://www.reuters.com/article/2011/10/26/us-swiss-tax-investigation-idUSTRE79P6II20111026

Read more at: Tax Times blog

FATCA Guidance to Focus on Helping Banks & Withholding Agents Comply

October 31, 2011

The next round of guidance under the Foreign Account Tax Compliance Act expected in coming months will focus on giving banks and withholding agents the information they need to begin reporting U.S.-owned accounts to U.S. tax authorities, a senior Treasury Department official recently said.

“We are on track to issue proposed rules by the end of the year,” said Michael Plowgian, an attorney-adviser in Treasury's Office of International Tax Counsel.

Speaking at the 2011 fall meeting of the American Bar Association Section of Taxation on Oct. 21, Plowgian said the proposed rules will focus on critical issues for immediate answers as the government begins phased implementation of FATCA.

One key area is to give foreign financial institutions (FFIs) the information they need to begin entering into withholding agreements with the United States, the Treasury official said. Another is providing guidance for withholding agents.

Plowgian said while FATCA is in part a response to a number of financial scandals involving overseas banks, “it is generally consistent with a trend toward increased transparency of tax information.”

Speaking to the tax section's Investment Management Committee, Plowgian acknowledged that the withholding provisions under the legislation get “a lot of attention.”

However, he said, the government's aim is to achieve the reporting by foreign banks, not to take a punitive stance.

“If this worked out perfectly, there would be no withholding under FATCA and that's ultimately our goal,” he told practitioners.

Read more at: Tax Times blog

9th Circuit Finds Fifth Amendment Privilege Does Not Apply to Swiss Banking Records

October 26, 2011

Ninth Circuit Finds Fifth Amendment Privilege Does Not Apply to Swiss Banking Records - The Fifth Amendment privilege does not apply to records that fall under the Required Records Doctrine.

On August 19, 2011, the U.S. Court of Appeals for the Ninth Circuit upheld a lower court’s ruling compelling an individual, M.H., to comply with a grand jury subpoena duces tecum demanding that he produce records relating to foreign bank accounts. The decision turned on the issue of whether the subpoena violated the individual’s Fifth Amendment protection against self-incrimination or whether the Fifth Amendment did not apply under the Required Records Doctrine.
M.H. was the target of a grand jury investigation into whether he used Swiss bank accounts to evade federal taxes. In 2009, as part of a deferred-prosecution agreement, UBS had provided M.H.’s name, along with approximately 250 others, to the United States Department of Justice, identifying him as someone who might have evaded taxes.

The government’s subpoena sought information that M.H. was required to keep and maintain for inspection under the Bank Secrecy Act of 1970 ("BSA"), and report to the government annually through the Form TD F 90-22.1, "Report of Foreign Bank and Financial Accounts" or "FBAR," including records reflecting the name of the account holder, the account number, the name and address of each foreign bank maintaining the account, the type of account, and the maximum annual value for each account.
Finding thre elements of the Required Records Doctrine present, the Ninth Circuit affirmed the trial court’s order compelling M.H. to produce the subpoenaed information. The court’s decision suggests that anyone claiming Fifth Amendment protection for foreign bank records will have a tough battle, particularly in the Ninth Circuit.

For more infromation go to http://www.ca9.uscourts.gov/datastore/opinions/2011/08/19/11-55712.pd



Read more at: Tax Times blog

All Swiss Banks Are Now Ready to Reveal Clients

October 25, 2011

Swiss banks will probably settle a sweeping U.S. probe of offshore tax evasion by paying billions of dollars and handing over names of thousands of Americans who have secret accounts, according to two people familiar with the matter.

U.S. and Swiss officials are concluding negotiations on a civil settlement amid U.S. criminal probes of 11 financial institutions, including Credit Suisse Group AG (CSGN), suspected of helping American clients hide money from the Internal Revenue Service. Switzerland, the biggest haven for offshore wealth, wants an end to new U.S. probes while preserving its decades-old tradition of bank secrecy.

The U.S. seeks data on Americans who have dodged U.S. taxes and a pledge by Swiss banks to stop helping such clients, according to the people. The Swiss reached accords this year with Germany and the U.K. on untaxed assets.

The Swiss government seeks to outline a final accord for the Foreign Affairs Committee of its Parliament’s upper house on Nov. 10, according to a person familiar with the matter. The number of banks that will pay to resolve the U.S. negotiations may extend beyond the 11 under criminal investigation, the people said.

“We are aiming for an all-encompassing solution that will apply to all the banks,” Finance Minister Eveline Widmer- Schlumpf said in an Oct. 4 interview in the Swiss capital Bern.“We don’t want to be confronted with the same issues time and again.”

Under accords this year with Germany and the U.K. on untaxed assets, the identity of clients remained secret.

The U.S. insists that the Swiss disclose client account data, and the banks may end up handing over data on 5,000 to 10,000 accounts, the people.

The U.S. Justice Department also may bring criminal charges or civil enforcement actions against any of the 11 financial institutions. They could avoid prosecution by separately paying fines, admitting wrongdoing and disclosing data, the people said. On Aug. 30, the Justice Department requested statistical data from the 11 about their U.S. accounts, which the U.S. has received and is analyzing, the people said.

Credit Suisse, the second-biggest Swiss bank, said July 15 that it was a target of U.S. prosecutors. On July 21, seven Credit Suisse bankers were indicted on a charge of conspiring to help U.S. clients evade taxes through secret accounts.

The group of 11 also includes HSBC Holdings Plc (HSBA), the biggest European bank, Basler Kantonalbank, Wegelin & Co., Zuercher Kantonalbank, and Julius Baer Group Ltd. (BAER), the people said. Three Israeli banks -- Bank Leumi Le-Israel BM (LUMI), Bank Hapoalim BM (POLI), and Mizrahi-Tefahot Bank Ltd. (MZTF) are on the list, as well as Liechtensteinische Landesbank AG and an asset manager, NZB AG.

This may well be the Second Shoe dropping for US Depositors!

For more information on this matter go to:http://www.bloomberg.com/news/print/2011-10-24/swiss-banks-said-ready-to-pay-billions-disclose-customer-names.html

Read more at: Tax Times blog

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