‘Chaotic’ US tax stampede overwhelms specialists
Business has never been so good for American tax specialists in Switzerland. A previously niche calling has suddenly become a booming cottage industry struggling to keep up with demand for its services.
A steady trickle of clients became a torrent in 2009 when the United States punished UBS bank for assisting tax evaders. But the sluice gates were opened in August last year when Swiss banks were given the chance to turn in their US customers in return for immunity against criminal prosecution.
Since then, thousands of letters have been sent out to Swiss-based US citizens demanding proof that they have played straight with the Internal Revenue Service (IRS). The message is clear: tell us everything about your financial status or go bank elsewhere.
One dual US-Swiss citizen, who only wants to be identified by her initials CW, was contacted by her bank in January giving her 18 days to come up with US tax paperwork backdated to 2008. “For years they thought I was British, but when I told bank staff I was American they went as white as a sheet,” she told swissinfo.ch.
According to a 2009 IRS report, some 93.4% of her compatriots living abroad had done the same thing.
As a result, CW will be joining the 2,999 US citizens around the world who tore up their US passports last year – a leap of 221% on 2012. It is not a decision she has taken lightly, but having noted the ease at which people can open opaque, ‘no questions asked’ shell companies in the US state of Delaware, CW feels the victim of discrimination.
Tax advisors referred to the sudden stampede of panicked people as “chaotic”. One Swiss-based specialist, Steven Kraft, said he received several calls a day despite having no website or overt marketing operation.
“The IRS is shaking trees, and it is not coconuts that are falling out, but Americans,” he told swissinfo.ch. “Some of these people may have been born in the US, but moved to Switzerland as infants. They have no US passport, no social security number and no idea that they should have been filing tax returns to the IRS.”
Some Swiss banks have simply restricted services to US clients or ejected them altogether, and among those that still choose to do business with such high risk clients, some have made some strange decisions.
The original story at Swiss Info.