Saturday, July 24, 2010

Swiss Court Rejects Last Hopes of U.S. Depositors (7/24/10)

In perhaps an anticlimax, on July 19, the Swiss Administrative Court formally torpedoed the hopes of anonymous U.S. depositors within the group of 4,450 that Switzerland agreed to disclose to the IRS. The Swiss summary of the holding is here and the official (in German) opinion is here.  The anonymous depositor, representative presumably of a larger group, had hoped that the Court would hold that the agreed upon turnover violated "European Convention on Human Rights, the Federal Constitution and [Swiss[ federal laws." The Court held that the later promulgated agreement and approval by the Swiss Parliament trumped all of those otherwise weighty authorities. I link here an English version of the Summary and here the German version of the opinion.

Those U.S. depositor now will have their documents and identities turned over and will fact possible criminal prosecution for the underlying conduct (because they did not join the voluntary disclosure program) and for bringing action in Switzerland to avoid the turnover. (See discussion of 18 U.S.C. Section 3506 here.) As to the latter, even if the Swiss do not identify the persons who brought these suits to avoid disclosure, DOJ / IRS could probably figure it out.

Finally, I avoid further fulminations over DOJ Tax's claim to have the authority to investigate tax crimes independently of a grand jury investigation, but some are present in this turnover.

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