Lawyers for 73 Swiss banks are questioning the terms of self-disclosure program that would allow them to achieve amnesty for having helped Americans avoid paying taxes to the U.S. government. In a request to the Justice Department, the attorneys objected to certain terms while recommending changes to the model accord.
The program wins bank participants a guarantee that they won’t be prosecuted if they disclose accounts belonging to Americans that had previously gone undeclared. While the bank could still be slapped with penalties the equivalent of up to half of what was in the hidden funds, they might be able to negotiate the amount down.
One of the requirements under the plan is that banks have to cooperate with other foreign or domestic law enforcement agencies that become involved in any probe over a tax evasion matter. However, Bloomberg reports, according to a number of the lawyers, this requirement wasn’t in the program when some 100 firms signed up so they could win non-prosecution deals in exchange for their cooperation. The banks claim that such a stipulation turns a program having to do with U.S. tax issues into a global agreement that doesn’t include guarantees or safeguards for them.
The banks want the program to ensure that the Internal Revenue Service doesn’t go after them if they reveal how they helped Americans to not pay taxes. They also are unhappy about the breadth of provisions related to breaches of the agreement.
Offshore accounts in Switzerland, Indian, Bermuda, Panama, Israel, the Cayman Islands, Liechtenstein, and Hong Kong already have been subject to criminal cases by the DOJ for tax evasion. The government has threatened to begin criminal probes against banks that don’t join the program.
Banks that are charged in criminal court would be jeopardizing their ability to hold deposits, make transactions in dollars for clients, and invest their assets in U.S. Securities, which could place their businesses in jeopardy. Wegelin & Co., a 270-year old bank, had to shut its doors after the U.S.indicted it for helping Americans evade paying their taxes. The bank filed a guilty plea last year.
Earlier this year, Credit Suisse Group AG (CS) was fined $2.6 billion after admitting it helped U.S. citizens evade taxes. In 2009, UBS AG (UBS) paid $780 million to settle charges that also were for helping Americans avoid paying taxes. The U.S. then sued UBS to get them to disclose the accounts. The bank disclosed 4,500 accounts to the government.
Earlier this month, Deutsche Bank AG (DB) also joined the self-reporting program. The bank recently drew scrutiny after The Wall Street Journal reported that the Federal Reserve Bank of New York found that the bank’s outfit in the U.S. suffered from financial reporting deficiencies.
Swiss banks urge U.S. to amend demands in tax amnesty deals, Chicago Tribune/Bloomberg, October 23, 2014
Deutsche Bank to Aid U.S. Justice Department in Swiss Tax Evasion Probe, The Wall Street Journal, October 9, 2014
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