Swiss banks ordered to disclose account details of FATCA non-compliers

Monday, 07 December 2020
Swiss banks that have already supplied aggregated information about clients under the US Foreign Account Tax Compliance Act (FATCA) are now being ordered to reveal details of customer accounts that have not yet been fully disclosed to the US authorities.
US file

FATCA was introduced in 2010, compelling banks to report accounts owned by US taxpayers to the US Internal Revenue Service (IRS). It was closely followed by US Department of Justice action against Swiss banks, threatening them with prosecution unless they made separate disclosures of their US clients and paid financial penalties. Most banks agreed to join this non-prosecution programme, but some did not, or were disqualified from doing so because they were already under criminal investigation.

The IRS' has now submitted group administrative assistance requests to the Swiss Federal Tax Administration (FTA). They concern 12 Swiss banks and a fiduciary institution.

The information requested by the IRS documents concerns accounts that were typically identified as American-owned, or accounts of non-participating financial institutions (FIs) to which foreign reportable amounts had been paid, but whose owner did not consent to having their details passed to the IRS. In the absence of this consent, the FI concerned had to report the account information to the IRS in aggregated form for the years 2014-2019.

The persons concerned are required give the FTA their Swiss address if they are domiciled in Switzerland, or designate a person in Switzerland authorised to receive service if they are domiciled abroad. Legal successors of deceased accountholders must also submit a certificate of inheritance.

Previously, Switzerland has not recognised group administrative assistance requests from the US, but has recently agreed to accept them under certain conditions. One of these is that persons and institutions affected by the requests have an opportunity to object to the requests. For the current batch of IRS requests, the deadline for providing either the above information or objection is 20 December 2020. Following this date, the FTA will issue a final decree for each account relationship concerned by a group request.

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