The United States and Liechtenstein have signed an agreement to exchange tax information, including details on the holdings of citizens who are sheltering money in the foreign bank accounts, but only when the U.S. already knows the names of the tax evaders.
The U.S. has been pressuring Liechtenstein and other countries that provide secret bank accounts to reveal more about the assets of U.S. citizens (see U.S. Cracks Down on Tax Havens). Germany too has been pressing for more information after German authorities paid a former employee of the Liechtenstein banking group LGT approximately $6.2 million for a CD-ROM containing the names of more than 1,000 wealthy individuals who had deposits (see Germany to Share Tax Evasion Information).
However, the tax information exchange agreement signed by Liechtenstein and the U.S. requires the authorities to provide specific information, including the "identity of the taxpayer whose tax or criminal liability is at issue," so investigators won't be able to make a general request for information on all U.S. taxpayers with accounts at Liechtenstein banks.
The agreement will permit the U.S. to seek information from Liechtenstein on all types of federal taxes, in both civil and criminal matters. The requested information must be obtained and exchanged without regard to whether the country receiving the request needs the information for its own tax purposes or whether the conduct being investigated would constitute a crime under its law.
If the country receiving the information request does not already have the information, it must take steps to gather it. Requests from one country to the other must be honored, even if the information relates to, or is held by, nonresidents.
The IRS won't be able to use the information to look for past tax evasion under the new agreement. The deal allows the U.S. to ask for information relating to 2009 and the following years. Documents or other information created before 2009 can be obtained from Liechtenstein provided that the request relates to an investigation of a post-2008 year. In the case of pre-2009 years, the U.S. can currently obtain information regarding criminal tax matters under the U.S.-Liechtenstein Mutual Legal Assistance Treaty.
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