For several years the Internal Revenue Service has been cranking up the heat on U.S. taxpayers in California and elsewhere who have unreported income from foreign bank accounts. Many of those accounts are in Switzerland.
UBS and Credit Suisse are two large banking institutions with which the IRS has been in tax litigation in attempt to gain compliance of U.S. taxpayers with offshore accounts. Switzerland has signed an agreement with U.S. and agreed to provide more assistance. However, the head of UBS is apparently in a kerfuffle and has accused the United States of being in an economic war with European nations.
According to news sources, the UBS CEO claims that 20,000 jobs are at stake. Previous tax litigation against the company reportedly resulted in a $780 million fine and the release of bank account information from 4,500 client files in the Swiss bank.
Since 1996 when a treaty was signed between the United States and Switzerland, the IRS has been hampered by the assumption that only bank account owners suspected of intentional fraud are subjected to a handover of financial details. A recent agreement by the two governments, and tax litigation pursued by the IRS, has been changing the landscape of foreign accounts in Swiss banks.
The United States is not the only nation that is negotiating with the Swiss. News sources say that Germany signed a bilateral tax evasion treaty with Switzerland which should result in 10 billion EURO ($13 billion) in new tax revenue.
Individuals in the United States still have time to take advantage of the offshore bank account amnesty program being offered by the IRS.
Source: Contra Costa Times, “Paper: UBS head calls tax flap ‘economic war’,” April 22, 2012
Source: New York Times, “I.R.S. Renews Disclosure Program for Offshore Assets,” January 9, 2012