U.S. Group Requests to FTA for U.S. Individual NonConsenteng Account Information (6/30/21)

It’s been quite some time since I paid any attention to the application of FATCA with Swiss Banks and how information of U.S. taxpayers' accounts are reported to the IRS under FATCA.  To provide a high-level summary, for U.S holders of accounts not consenting to automotive disclosure to the IRS of account information, those banks are required to make aggregate disclosures to the Federal Tax Administration ("FTA") which provides the aggregate information to the IRS.  For Swiss Banks that report in the aggregate, the IRS may make “group requests” through the Administrative Assistance procedure that requires the Swiss Banks to disclose the individual account information.  The Swiss Federal Tax Administration discussion of the process is here; the IRS discussion and links describing the general process is here; the IRS description is here  Individual account owners are notified of the request either by notice to the notice information with respect to the account or by publication in Switzerland and may appeal (good luck with that).

Group requests are requests requiring the FTA and the Swiss Banks to get information through account characteristics where the name of the account holder is not known to the requesting authority (here the U.S. competent authority).  I don't know what characteristics a provided in some format like database fields, but imagine that the fields may include (i) amount in each account on the FBAR reporting date; (ii) high amount during the report year; (iii) whether the client had some type of no mail instruction or mail instructions for a non-US address; and other similar characteristics.  The IRS through the competent authority could then ask, for example, for (i) all accounts which in the aggregate for the Bank equaled or exceeded $500,000 on the reporting date or during the year; or (ii) all accounts with aggregate amounts of $250,000 for accounts any of which had a no mail instruction or mail to a non-US address.  There are a number of other characteristics the IRS might specify that would "mine" the "have value" targets requiring that the Banks disclose.

 The IRS has made several group requests starting in December 2020.  The latest request (the 5^th request) was June 28, 2021, with the aggregate banks for whom requests were made as follows (a copy and paste from the FTA page, here; note that some Financial Institution names may be slightly different on my spreadsheet): 

Financial Institution or Facilitator

Aargauische Kantonalbank

AXA Leben AG

Bank CIC

Bank Cler

Bank J. Safra Sarasin AG

Bank Julius Baer

Bank Lombard Odier & Co Ltd

Banque Cantonale de Genève

Banque Cantonale du Valais (Walliser Kantonal Bank)

Banque Cantonale Vaudoise

Banque Heritage SA

Banque SYZ PA

Basler Kantonalbank

Berner Kantonalbank AG (BEKB)

BNP Paribas (Suisse) SA (BNPP)

Bordier & Cie Switzerland

BSI SA

Coutts & Co Ltd

Credit Suisse (Schweiz) AG

Credit Suisse AG

Credit Suisse Stiftung für Mitarbeiter-Beteiligungsmodelle

EFG Bank SA

Falcon Private Bank AG

Frankfurter Bankgesellschaft (Schweiz) AG

Hapoalim (Schweiz)

Helvetia Schweizerische Lebensversicherungsgesellschaft AG

HSBC Private Bank (Suisse)

J.P. Morgan (Suisse) AG

Lloyds Bank plc, Londres, succursale de Genève (inzwischen gelöscht

Maerki Baumann & Co. AG

Migros Bank AG (Migros)

Neue Aargauer Bank AG (übernommen durch Credit Suisse (Schweiz) AG)

Pictet & Cie

Piquet Galland & Cie SA

PostFinance AG

Société Générale Private Banking (Suisse) SA (SGPB-Suisse)

Swiss Life Holding AG (& Subs)

Swissquote Bank SA

UBS AG

Zürcher Kantonalbank (ZKB)

 A discussion of the group request process is in the following linked web discussion: FATCA group requests – the New Reality for Swiss banks (EY Switzerland Blog), here

The following is from  the CreditSuisse Annual Report 2020, pp. 39-40; 41 (emphasis supplied) here:

Tax

Automatic exchange of information and administrative assistance in tax matters In Switzerland, the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAC) and the Multilateral Competent Authority Agreement (MCAA), together with the Federal Act on the International Automatic Exchange of Information in Tax Matters and its implementing ordinance, form the legal basis for the automatic exchange of information. Based on the MCAA, the multilateral agreement with the EU on the international automatic exchange of information in tax matters and a number of bilateral AEI agreements, Switzerland collects and exchanges information with more than 100 jurisdictions in respect of financial assets held in, and income derived thereon and credited to, accounts or deposits maintained in Switzerland.

Further to the MAC, Switzerland is required to spontaneously exchange certain information on advanced tax rulings in accordance with the OECD and G20 project to combat base erosion and profit shifting (BEPS). Additionally in 2009, Switzerland adopted the OECD standard on administrative assistance in tax matters in accordance with Art. 26 of the OECD Model Agreement which has subsequently been included in 60 Double Tax Agreements (DTAs), of which are in force and applicable. The 2009 protocol (Protocol, ratified in 2019) amending the tax treaty [*37] regarding income tax between Switzerland and the US, a mechanism for the exchange of information upon request in tax matters between Switzerland and the US is now in place. This mechanism allows the US to make group requests under the US Foreign Account Tax Compliance Act (FATCA) concerning non-consenting US accounts and non-consenting non-participating foreign financial institutions. The Protocol further erases the distinction between tax evasion and tax fraud in the context of administrative assistance to permit any exchanges of information as may be relevant to the administration or  enforcement of the domestic laws concerning taxes.

Finally, in accordance with the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports as well as the implementing Swiss federal legislation, multinational groups of companies in Switzerland have to prepare country-by-country reports since the 2018 tax year with the exchange of the reports by Switzerland having started in 2020.

* * * * 

FATCA

Pursuant to an agreement with the US Internal Revenue Service (IRS) entered into in compliance with FATCA, Credit Suisse is required to identify and provide the IRS with information on accounts held by US persons and certain US-owned foreign entities, as well as to withhold tax on payments made to foreign financial institutions that are not in compliance with FATCA and account holders who fail to provide sufficient information to classify an account as a US or non-US account. Switzerland and the US have entered into a “Model 2” intergovernmental agreement to implement FATCA, which requires Credit Suisse to disclose account details directly to the US tax authority with the consent of the US clients concerned. Where US clients do not provide Credit Suisse consent to disclose to the IRS, the US authorities must make a group request for this data through normal administrative assistance channels. Group requests are effective for  information applying to cases dating from June 30, 2014.