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Scott Michel Quoted in Wall Street Journal Article, Swiss Amend U.S. Tax Treaty

March 6, 2012, Wall Street Journal

Excerpt taken from the article.

The Swiss Parliament on Monday amended a tax treaty with the U.S., allowing Washington to more easily identify U.S. taxpayers with undeclared Swiss accounts.

The lower house's approval following the Swiss senate's backing in December,paves the way for the ratification of a tax-information-sharing agreement between the two countries. Lawmakers hope the change also will help end a yearslong tax battle and lessen U.S. pressure on some Swiss banks.

The amended treaty, which must be ratified by the U.S. Senate, makes it far easier for U.S. authorities to identify suspected tax evaders. Although the Swiss/U.S. tax treaty has allowed for the exchange of information for decades, in the past the Swiss interpreted the rules narrowly. When the U.S. requested taxpayer information, it had to supply a name and address. In addition, the Swiss definition of "tax fraud" was far narrower than the U.S.'s.

"With these votes, the Swiss have taken decades of practice and turned it on its head," said Scott Michel, an attorney with Caplin & Drysdale in Washington, who also has represented many U.S. taxpayers with Swiss accounts.

Under the new treaty, U.S. authorities will be able to ask the Swiss to disclose names of U.S. taxpayers at a bank who exhibit certain "behavioral patterns" indicating tax evasion under U.S. law, such as trying to conceal the ownership of the account through a trust. The U.S. also will be able to request information even from small cantonal banks that, unlike UBS and Credit Suisse Group, don't do business in the U.S.

There are no data on how many U.S. taxpayers have secret Swiss accounts, but experts say the IRS's pursuit of this issue indicates that it may be "thousands, or even tens of thousands," Mr. Michel said.

To read more about the Swiss tax treaty click here.


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