Friday, March 13, 2009

Chipping Away at Tax Haven Secrecy

It is no secret that tax haven banks, enabled by their tax haven countries, assist U.S. taxpayers and other persons of varied citizenship to hide ill-gotten gains either from their own tax authorities or from the persons they ill-got their gains from. This has been a problem in the U.S. for years, but the U.S. has finally gotten or used the leverage to start serious attempts to deal with the problem. A few years back, the IRS proceeded against tax havens in the Caribbean by using the John Doe Summons to get credit card records in the U.S. which they could use, with some creative investigation, to identify the U.S. taxpayers using them to spend the money without, they thought, a paper trail to them.

Recently, the U.S. DOJ Tax Division has turned its sight European tax havens, principally (at least in terms of quantity of publicity) Switzerland. I have previously discussed on this blog the U.S.'s recent unilateral attempts to address the abuse -- a deferred prosecution agreement with a substantial monetary fine and a John Doe summons to to compel the Swiss banking giant UBS to identify U.S. depositors, a high percentage of whom may be U.S. tax evaders. This hits UBS and Switzerland where it hurts -- in their respective well-lined dirty pocketbooks. The gravy train is slowing down.

Today's news reports (e.g., WSJ) that, under considerable pressure from U.S. and other relatively civilized -- or, at least, economically powerful -- countries, Switzerland has at least, half-blinked:

Switzerland's cabinet agreed at a meeting Friday to support negotiation of bilateral treaties with other countries, under which Switzerland would provide legal assistance for international tax-evasion probes. The treaties would be negotiated based on guidelines from the Paris-based Organisation for Economic Co-operation and Development, which require nations to waive bank secrecy for investigations of both tax evasion and tax fraud.

It is unclear what this move may mean in the real world. Often such apparent retreats are nothing more than feints that mean little. But these various initiatives do suggest that the fabled wall of secrecy is slowly coming down. Caveat Taxpayers, and, as always in the crimes area, their counsel.

No comments:

Post a Comment

Please make sure that your comment is relevant to the blog entry. For those regular commenters on the blog who otherwise do not want to identify by name, readers would find it helpful if you would choose a unique anonymous indentifier other than just Anonymous. This will help readers identify other comments from a trusted source, so to speak.