Frank L. Brunetti
September 3, 2012
The United States is making many overseas banks nervous, as it considers what type of punishment to hand down for institutions that were complicit in Americans’ attempts to evade taxes.
There are currently 11 Swiss banks under investigation by the U.S. government, accused of aiding wealthy American customers in violating federal tax law
by failing to report income, according to Reuters. In an effort to remove the black mark from its banking institutions and maintain its reputation in the global financial industry, Switzerland has tentatively agreed to comply with the U.S. anti-tax evasion law, Foreign Account Tax Compliance Act.
The Internal Revenue Service has leaned heavily on FATCA to curb tax violations and prosecute corporations and wealthy individuals that fail to comply with federal reporting standards. While FATCA enforcement rules have yet to be finalized, Swiss banks’ compliance with the laws is expected to be a central part of a deal being negotiated between the U.S. and Switzerland, the news source reports.
“We are prepared to sign a settlement with the U.S. for the Swiss banks today,” said Switzerland Finance Minister Eveline Widmer-Schlumpf, according to Reuters. “We feel we have made a constructive proposal to the U.S. but it is up to them to accept it or not.”
In addition to negotiations with countries that provide tax havens for Americans, the IRS has also shored up its efforts to find and prosecute tax evaders despite facing budget cuts. The IRS has also enhanced its Offshore Voluntary Disclosure Program as a method of encouraging tax evaders to come forward and report hidden income without the fear of prosecution.