Last week, the Senate Permanent Subcommittee on Investigations held a hearing with key members of Credit Suisse, the second largest Swiss bank, and the Department of Justice (DOJ) regarding the subcommittee’s report. This report criticized Credit Suisse for not handing over the names of U.S. account holders fast enough and helping Americans evade taxes. It also criticized the DOJ for not prosecuting offshore tax evaders aggressively enough.
At the hearing, Credit Suisse executives stated the Congress needed to ratify the 2009 tax treaty between the United States and Switzerland before they could release the names of their U.S. clients. This treaty would allow Swiss bankers to reveal certain banking information, such as client names, without violating Swiss law. It differs from the 1996 tax treaty between the U.S. and Switzerland in that law enforcement is only required to establish that a taxpayer committed “tax evasion” with a showing that income related to a foreign account has not been reported rather than “tax fraud” has occurred, which was a greater burden.
Credit Suisse executives fear that releasing these names without ratification of the treaty would subject them to criminal indictments and prison terms by the Swiss government.
The main reason why Congress has not yet ratified the treaty since it was signed in 2009 is that Senator Rand Paul actively opposes its ratification. Paul believes that the treaty infringes on people’s privacy rights under the Fourth Amendment, which protects people from “unlawful searches and seizures.” He insists that the treaty should hold the government to a higher standard to receive private banking information.
However, the subcommittee hearing last week has put pressure on Congress to finally ratify this treaty. According to McCain, “it just went up in priority.” The CEO of Credit Suisse, Brady Dougan, stated that “Credit Suisse is ready to provide the additional information requested by U.S. authorities” once the treaty is ratified.
If you have an undisclosed Swiss bank account, let me help you make a voluntary disclosure and avoid serving jail time. Do not wait! I am most effective at minimizing your odds of facing criminal tax exposure when you speak to me early in a civil investigation before the IRS criminally investigates you.