Swiss Banks Seek Tax Amnesty as Third Accept U.S. Offer
One-third of Swiss banks offered amnesty by the U.S. for helping Americans evade taxes have applied for the program, a federal prosecutor stated at a Jan. 25 conference, according to three lawyers.
The U.S. government gave more than 300 Swiss banks until Dec. 31 to seek non-prosecution agreements if they have “reason to believe” they violated tax laws. Some 106 sought to join the initiative, which requires participants to disclose how they helped Americans hide assets, hand over data on undeclared accounts and pay penalties.
The program is the largest assault in a five-year U.S. Department of Justice crackdown on offshore tax evasion.
Banks in Switzerland, the largest cross-border financial center with $2.2 trillion of assets, closely examined accounts before seeking to join the disclosure program.
The Swiss government encouraged banks to join the program, announced Aug. 29. The Swiss Bankers Association criticized the program’s cost, pointing to questions such as who qualifies as a U.S. client and what assets are considered untaxed. The answers could determine how much a bank pays in penalties.
To gain non-prosecution deals, banks must pay 20 percent of the value of accounts not disclosed to the Internal Revenue Service on Aug. 1, 2008, 30 percent for such accounts opened between then and February 2009 and 50 percent for accounts opened afterward.
Of four categories, those under criminal investigation are known as Category 1 banks, while those seeking non-prosecution agreements are Category 2 banks. Later this year, banks can tell the government if they don’t have undeclared U.S. accounts and won’t pay fines, or if they have predominantly local clients.
UBS avoided prosecution by admitting it fostered tax evasion and paying $780 million. It handed over 4,700 accounts. The U.S. prosecuted 100 taxpayers, bankers, lawyers and advisers for offshore tax crimes. At least 38,000 taxpayers avoided prosecution by paying back taxes and penalties and disclosing which offshore banks and advisers helped them hide assets.
Banks seeking non-prosecution agreements must disclose the total number of U.S. accounts since 2008, their highest dollar value, and the employees who managed them.
Category 3 banks seek Justice Department letters saying they’re not a target of a criminal probe. In return, an independent examiner must confirm the bank broke no laws. Banks must apply from July 1 to Oct. 31. Banks seeking Category 4 are those with almost all Swiss clients.
Original article at Bloomberg.