Article Summarizing the Swiss Bank Developments and Process

Article Summarizing the Swiss Bank Developments and Process

I offer here a new article which I think readers might find quite helpful.  Walter H. Boss and William M. Sharp, Sr., The Swiss-U.S. 'Turnover' Ground Rules: A Technical Update, 64 Tax Notes International 423 (11/7/2011), here.

Key points which struck me on a quick read are:

1. The article contains a very good short history of the saga involving the Swiss bank accounts.

2. Under the double tax treaty, Switzerland commits to provide information on the U.S.'s request for "tax fraud or the like." Tax fraud for this purpose does not include tax evasion which the Swiss view as a lesser evil than tax fraud. (Tax fraud is really bad rather than just bad.) In this regard, there is a bit of a semantic difference. In the U.S., we generally equate tax fraud and tax evasion, whereas the Swiss make a distinction between tax fraud and tax evasion. Indeed, it seems (see below), tax evasion may be merely failure to report the income and pay the resulting tax.

These linguistic difference call to mind another case I recently encountered where a British tax plan was called a "scheme." In the United States, the word scheme would connote something bad or evil and, in a tax context, even fraudulent. But, so I am told, in the U.K., a scheme is just a tax plan. This is somewhat confirmed anecdotally with this example from a book I was just reading last week (Hoffman, Joel MAnd God Said: How Translations Conceal the Bible's Original Meaning, p. 44 (Macmillan. Kindle Edition 2010):
Another British/American example is more subtle and, therefore, more likely to cause confusion. American author John Steinbeck's book Of Mice and Men takes its name from a line in a poem by Robert Burns. Many Americans are familiar with the quotation: "The best laid plans of mice and men [often go awry]." But that's not actually the original. The poem really reads, "the best laid schemes of mice and men. . . ." The problem is that in Scottish English, a "scheme" is any old plan, while in American English it's a plan to do something wrong or illegal. (Consider a "scheme to get money" versus a "plan to get money.")
Which is to say that it is all about interpretation.

3. Under a protocol negotiated in 2009 but awaiting confirmation by the U.S. Senate,

the exchange of information under the protocol will no longer be limited to cases of ''tax fraud or the like'' but will also encompass cases of mere tax evasion. Therefore, an action that would merely constitute tax evasion under Swiss law (for example, mere non-reporting of income and failure to pay applicable tax thereon) but not ''tax fraud or the like'' would be subject to mutual assistance and would override otherwise applicable Swiss bank secrecy provisions.


View Jack Townsend's input in its entirety on the Federal Tax Crimes blog site.

For additional insight, explore Tax Crimes, authored by Jack Townsend, available in the LexisNexis® Store.

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