In another chapter of the IRS versus the Swiss Banks saga, Republican Senator Rand Paul from Kentucky has recently blocked an amendment to a U.S.-Swiss tax treaty that provides the IRS data on Americans with hidden offshore bank accounts. Paul believes the protocol is too “sweeping” and would threaten taxpayers’ Fourth Amendment rights that guard against unreasonable search and seizure.
Bloomberg’s article Rand Paul Seeks to Block Tax Treaty Change on Swiss Accounts reports that the Senators’ concerns regard “the due process of whether or not people have any kind of process before their records are looked at” and their “constitutional protections and privacy of banking records.”
Under the current treaty, when the U.S. requests taxpayer data from Swiss banks, it typically involves false documents or third parties who disguise account ownership thus protecting banking secrecy laws. The new U.S.-Swiss protocol offers the following:
- Language that prevents Swiss officials from denying an information request due to banking secrecy laws.
- Allows the U.S. to request account data without specifying taxpayers by name.
The Swiss government won’t agree to the protocol until both countries agree to a solution that ends negotiations on the investigation of Swiss banks. In a recent blog post, I highlighted the Swiss banker’s request to protect their most prized asset: Swiss banking secrecy laws.
While the Senator’s motives appear to have American taxpayers best interests in mind, critics believe his treaty blocking actions will impair the U.S. crackdown on offshore tax evasion by giving tax help to those who may have committed criminal tax fraud. Paul’s critics, including Senator John Kerry believe that the U.S. loses global credibility and accountability by not ratifying the protocol especially after working with the Swiss to come up with it.
Rand’s actions to block the protocol may be due to the administration’s desire to implement the Foreign Account Tax Compliance Act, or FATCA which accomplishes the following:
- Bypasses other governments.
- Applies to non-U.S. banks.
- Requires banks to report identities of U.S. clients to the IRS.
- Withhold money from client accounts that don’t provide enough information.
FATCA is estimated to generate $8.7 billion over 10 years, according to data gathered by Bloomberg. Tax revenue projections such as these, as well as IRS figures showing a collection of approximately $2.7 billion in tax revenues resulting from the 2009 and 2011 Offshore Voluntary Disclosure Initiatives demonstrate why the IRS does not want to lose billions in tax revenues from non-reported offshore accounts and is willing to put up a fight.
If you have unreported assets, being proactive about disclosing your foreign funds immediately will work in your favor. But have experts on your side to advise you like a tax attorney or tax resolution specialist to proceed in your best interest and help negotiate an offshore tax settlement.
More Tax Help, IRS News and Tax Relief Tips:
- IRS Help for Americans with Foreign Income
- Offshore Banking-Swiss Tax Evasion Advisors Indicted
- FATCA-No Tax Relief for Americans Living Abroad
- Offshore Tax Evaders Get Preferred IRS Help
- Swiss Bank Wegelin Indicted for U.S. Tax Evasion
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