The New Tax Information Exchange Agreement: A Potent Weapon Against U.S. Tax Fraud?
25 Pages Posted: 15 Feb 2010
Date Written: 2004
On October 2, 1996, after sixteen (16) years of negotiation, the U.S. signed a new tax treaty with Switzerland ("1996 Agreement"). The seventh and final category of eligible persons is a specific family foundation under Swiss law. In the fifth hypothetical, the taxpayer essentially undertakes the same transaction as in the previous two examples (examples 3 and 4), but the taxpayer does not keep records of receipts or expenses, and all the relevant information is told to authorities by an informant who specifically states that the individual told the informant that the taxpayer has been underreporting his or her income. More recently, however, money laundering and organized crime have subverted this underlying, noble purpose of Swiss banking secrecy. As a result, the new law appeases international pressure on Switzerland to relax its banking secrecy laws, eliminates conflicts currently existing in Swiss law concerning banking secrecy, and provides an increased deterrent to money laundering. However, with the renewed effort at information sharing between Switzerland and the U.S. stemming from the 2003 Agreement, it will be harder for terrorists or persons wishing to commit tax fraud to conduct their business in Switzerland because the Swiss are now not so willing to protect these people from the wrath of the U.S. ...
Suggested Citation: Suggested Citation