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Deal lifts 'secrecy veil' on Americans' holdings in Swiss banks

Switzerland has long stood as the icon of banking confidentiality. As we've written about often in recent months, the United States has been particularly aggressive about going after Swiss banks in an effort to uncover unreported (and therefore untaxed) cash held by Americans.

Late last week, the two countries announced they have formalized processes that effectively close the door on alleged tax evasion. It's a development that Washington, D.C.-area tax attorneys are following closely.

There are some who estimate that Swiss banks hold more than $2 trillion in U.S. deposits. How much of that money is believed to be subject to taxation is a bigger question, but the Justice Department says the new agreement is a big step forward in U.S. efforts to clamp down on those suspected of tax evasion.

Individuals being targeted by the government over alleged foreign bank account issues should know that there are solutions available that may mitigate the threat of possible criminal investigations or expensive penalties by the Internal Revenue Service. To learn the options and pursue the right course, consult an attorney.

Under the just-announced deal, the majority of banks in Switzerland are obligated to reveal information about American-held accounts and tell the U.S. about transactions that might have shuttled funds from Swiss accounts and those of other banks inside or outside of Switzerland. They are also supposed to close accounts if the holders are known to be evading taxes.

The deal will allow complying banks to avoid prosecution for alleged noncooperation. That would set them apart from more than a dozen banks that are currently under criminal investigation by the U.S.

Some legal experts point out that there's one potential hurdle in making the deal work. Disclosure is supposed to happen under terms of existing treaties. But a specific 2009 treaty protocol aimed at facilitating the exchange hasn't won ratification by the U.S.

Source: Dealbook.NYTimes.com, "Swiss Agree on Penalties for Banks That Aided Tax Cheats," Lynnley Browning, Aug, 29. 2013 

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