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After months of negotiating, an agreement has been reached by which Swiss Bank UBS will hand over thousands of account holders' names and account information to the IRS. The move is the latest in attempts by US authorities to crack down on tax cheats hiding assets overseas.
First of all, what's so special about Swiss banks? In a word, privacy. Swiss banks have long reputation for guarding the privacy of account holders. Though Switzerland became an international banking capital long before, in 1934 it codified the practice of bank secrecy into law. This made it a crime for bankers to release certain information regarding bank clients.
As reported by the LA Times, last year US authorities requested from Swiss bank UBS information to identify the holders of 52,000 accounts. Authorities believed that these accounts may have been used to hide assets in order to avoid paying taxes.
This put US attempts to track down tax cheats in direct conflict with centuries of banking secrecy in Switzerland. The Swiss government intervened, stating that it would not allow UBS to hand over the information.
As reported by the Wall Street Journal, the Swiss government's position changed following a federal lawsuit in the US against UBS. Now, with the Swiss government's approval, UBS will hand over information about 4,450 accounts held by Americans in exchange for the US dropping its lawsuit.
As a result of numerous federal probes, UBS has already agreed to pay $780 million for helping Americans avoid taxes.
The IRS has offered amnesty for those who voluntarily disclose that they've avoided taxes through overseas banks, if those people speak up by September 23.
They would still owe back-taxes, however, would avoid the heft penalties and possible jail time for those the government finds to have avoided taxes by using a Swiss bank.
As detailed in a Department of Justice press release, individuals who failed to report an overseas account to the IRS (who could face jail) will be on the hook for:
The bottom line from IRS Commissioner Douglas Shulman: "Wealthy Americans who have hidden their money offshore will find themselves in a jam."
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.