Swiss Expect Deal With U.S. For Automatic Exchange of Bank Data
United States taxing authorities have been working to obtain information from Swiss banks about U.S. accountholders so that the IRS and Department of Justice can take action when U.S.-affiliated individuals have undeclared Swiss bank accounts.
A number of different approaches are involved in the U.S. effort to secure information on offshore accounts, including the Swiss Bank program. Under the Swiss Bank program, individual financial institutions receive amnesty from prosecution for facilitating tax evasion if the banks pay fines and provide information on accountholders.
Starting in 2017, however, U.S. authorities may no longer need to jump through hoops or make any extra effort at all to obtain details on financial accounts that U.S.-affiliated investors have at Swiss banks. This is because a deal is expected in 2017 which will facilitate the automatic and reciprocal exchange of information between the United States and Switzerland.
If this deal is made, it will effectively put an end to whatever was left of the market of secret Swiss bank accounts. Anyone investing in a Swiss bank account can expect the United States to have full and complete details about their financial information. If you are concerned about how this could impact your financial situation, you need to talk with a Washington D.C. international tax attorney about what this means for you.
A Closer Look at the Agreement to Exchange Bank Info in 2017
Currently, the United States is able to receive information about Swiss bank accounts held by U.S. persons. U.S. authorities can receive information because the United States and Switzerland entered into a Model 2 Intergovernmental Agreement.
However, under the current agreement between the United States and Switzerland, the United States can receive information only if it makes a request. Information reporting is permitted under the Level 2 Agreement with the consent of the holder of the account. If there is no consent from the accountholder, account details could still be available to U.S. taxing authorities if group requests are made.
The Swiss government and the United States are expected to enter into an agreement that will streamline and automate the exchange of information so this process of consent or requests is no longer necessary.
The Secretariat's deputy head of tax in Switzerland indicated that the Swiss government believes the agreement will be reached during the course of the 2017 year to facilitate automatic reciprocal exchange of data. This means that if a U.S. resident or U.S.-affiliated individual holds an account at a Swiss bank, the U.S. accountholder's information will be transmitted automatically to taxing authorities within this country.
It is important to understand that this agreement is the final end to the long tradition of privacy in Swiss banking, which has been steadily eroding over recent years. No longer can you keep money in an offshore Swiss bank account without the U.S. being aware of your offshore holdings.
You must make certain you comply with your own reporting requirements and pay all taxes due on your offshore accounts before the Swiss banks are required by an agreement to automatically transmit your data to U.S. authorities. To find out more about what your reporting obligations are and what your options are if you have undeclared offshore accounts, contact D.C. international tax attorney Kevin Thorn as soon as possible.