The Internal Revenue Service is collecting information on approximately 20 Swiss banks, according a letter from UBS, one of the main banks it has been investigating.
UBS wrote a letter to members of the Swiss Parliament urging them to approve a deal between the Swiss and U.S. governments. The Swiss and U.S. governments agreed last year for the Swiss to divulge the identities of 4,450 U.S.-based account holders who were suspected of large-scale tax evasion or fraud. However, recent court decisions in Switzerland enforcing the countrys banking secrecy laws have threatened to upend the agreement (see Swiss Court Nixes UBS Tax Deals).
The risks are very considerable for the Swiss financial center and the economy as a whole if parliament were to withhold its approval, said UBS in the letter, according to the Associated Press. Apart from UBS, many other Swiss banks were involved in cross-border business with American clients, the bank added.
The IRS has obtained information on about 20 Swiss banks from the voluntary disclosure program, said the bank, referring to a program that the IRS offered to encourage holders of foreign bank accounts to come forward on their own. It is quite possible that the IRS wants to obtain information on other customers of these banks, said UBS. Refusal by Switzerland to meet its obligations under international law could send a signal that would escalate these cases.
The bank also warned that Switzerland could be added to a blacklist of tax haven countries, or become subject to extra taxes within the U.S. if the agreement were not enforced.
This could mean that transactions not only for Swiss financial companies, but Swiss companies in general, could be made subject to a special withholding tax, said UBS, according to Reuters.
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