The U.S. has been in talks with the country of Switzerland on the role of Swiss banks in assisting Americans with tax evasion. The U.S. proposed stopping its investigations of Swiss banks that keep the unaccounted money in exchange for the banks sharing information about U.S. taxpayers. Swiss banks will also pay billions to U.S. revenue authorities to bring closure to the investigations and the legal battle. According to some Swiss sources, the sum could be up to $10.3 billion.
Switzerland has accepted the terms the U.S. demands, introducing transparency into the financial transactions of Swiss banks with U.S. taxpayers. The deal between the U.S. and Switzerland has been finalized, but it will now need to be approved by the U.S. Senate before taking effect.
This is an important step in bringing down tax evasion, through which the U.S. loses billions in tax revenue annually. Many large corporations and wealthy individuals hold billions in offshore bank accounts because of the secrecy they provide. Greater transparency will not only bring back the unaccounted money hidden in Swiss banks, but will also curb future tax evasion.
According to Swiss officials, the decision to agree to the U.S. demands was made by individual banks. As they risked being barred from the U.S. market, investigated and booked, Swiss banks have agreed to greater transparency. After the deal, it is hinted that the Swiss banks will be able to win legal closure to the issue. The bill will be presented before the U.S. Senate next month.
Apart from Switzerland, which is famous as a tax haven, U.S. authorities are also holding talks with many other countries in which they suspect American taxpayers hide money. The Foreign Account Tax Compliance Act (FATCA) requires U.S. taxpayers and foreign financial institutions to report to the IRS assets and financial accounts held by U.S. taxpayers respectively.
The present efforts by the U.S. government in tackling tax evasion will make it harder and riskier for American taxpayers to use tax havens to evade taxes.