TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, August 29, 2013

NY Times: U.S. and Switzerland Are Close to Deal on Penalizing Banks in Tax Case

NY Times DealBookNew York Times DealBook:  U.S. and Switzerland Are Close to Deal on Penalizing Banks in Tax Case, by David Jolly & Lynnley Browning:

Switzerland and the United States are close to announcing an agreement to end their long dispute over how to punish banks that helped Americans evade taxes, banking and government officials said on Wednesday. ...

In a conference call with journalists on Wednesday, a senior Justice Department official, who spoke on the condition of anonymity, said banks that had helped Americans evade taxes would be required to admit wrongdoing and pay penalties in exchange for deferred prosecution agreements, in addition to handing over informatThe final agreement will include penalty provisions “starting at 20 percent of the value of accounts starting in 2008,” she said. The penalties would increase for accounts opened after the Swiss bank UBS reached a deferred prosecution agreement in 2009, she added.

Another person briefed on the matter said the penalties could rise to as much as 50 percent of the value of the banks’ undeclared American accounts. The total penalties, the Justice Department official added, would probably be “in the hundreds of millions, exceeding a billion dollars.”ion on account holders. ...

A deal would not mean an end to Swiss banking secrecy because it would affect only the accounts of Americans, but it would represent a continuing erosion of the once-ironclad Swiss guarantee that banking information was sacrosanct.

Switzerland is working separately on a tax deal with the European Union, of which it is not a member. And it has agreed to cooperate with the United States on the Foreign Account Tax Compliance Act, a wide-reaching United States initiative to find American assets hidden overseas.

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