United States and Switzerland agree on access to Swiss bank information.

AuthorCrook, John R.

Following intensive negotiations, the United States and the Swiss Confederation announced in August 2009 an agreement intended to avoid jurisdictional conflict resulting from U.S. efforts to obtain information regarding accounts at the Swiss bank UBS AG held by U.S. taxpayers suspected of seeking to evade U.S. taxes. (1) The negotiations leading to the agreement included fierce lobbying in Washington, appeals by the Swiss president to the U.S. secretary of the treasury, and Swiss government threats to block compliance with any U.S. court order directing UBS to disclose client information. (2) The negotiated arrangements also include settlement of a U.S. suit seeking to force UBS to disclose the holders of 52,000 accounts. (3)

The agreement between the two governments establishes a procedure by which Switzerland will give expedited review to information requests pursuant to the existing bilateral tax treaty. It reportedly includes a sealed document outlining negotiated criteria that the Swiss will use in determining which accounts and account holders will be disclosed. This issue is a sensitive one, as the criteria may suggest both the boundary between what the Swiss authorities regard as tax evasion (which is not criminal in Switzerland) and criminal tax fraud, and the "bottom line" of U.S. tax authorities pursuing suspected tax evasion. (4) The parties reportedly anticipate requests regarding about 4450 UBS accounts. A U.S. Department of Justice press release describes the agreement and its background.

The Justice Department and the Internal Revenue Service (IRS) today announced that the agreement with the Swiss government has been finalized. As a result of the agreement, the United States will receive substantially all of the accounts of interest when it initiated the John Doe summons against UBS on June 30, 2008. Under the agreement, the IRS will submit a treaty request to the Swiss government describing the specific accounts for which it is requesting information. The Swiss government will then direct UBS to initiate procedures that could result in the turning over of information on thousands of accounts to the IRS. The IRS will receive information on accounts of various amounts and types, including bank-only accounts, custody accounts in which securities or other investment assets were held and offshore company nominee accounts through which an individual indirectly held beneficial ownership in the accounts. Also, the agreement retains...

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