The following comment appeared to my recent post:
As usual, you put the narrative together VERY well, and are so correct! and they all clamor to comply…
See this comment…
December 7, 2013 at 6:44 am
The print-edition of the Handelszeitung (HZ) has an interview with the Paolo Cornaro (PC), CEO of Corner Bank, a credit-card bank in Switzerland. He seems to indicate that the tax deal between the Swiss and the US governments is more about extortion than about an agreement (translated):
“HZ: The US tax dispute is further along. How do you judge the agreement?
PC: This program, which I cannot characterize as an agreement with good conscience, strikes all banks as a block. It does not make a distinction between banks which consciously went on American soil to acquire customers and those banks, to name an extreme example, that opened accounts for two Swiss who were also coincidentally in possession of US citizenship. We know today which banks are Category 1. Since we never actively pursued American customers, we should be in Category 3. With this view, however, we are exposed to the risk in the event that documentation is not water-tight that we would have to accept additional liability.
HZ: You must decide no later than December 9?
PC: It certainly could happen that there are banks which will not be so far. We will classify ourselves in Category 2 in order to avoid further discussions and risk a penalty. We have American customers who are properly declared. The program’s concept is however that all are tax evaders. Then we must prove that this is not the case.
HZ: What kind of penalty are you looking at?
PC: I cannot and do not want to mention a number. We want to close a chapter by paying a penalty and then can we look forward again.
HZ: You will pay in order to have peace and quiet?
PC: Yes. We found ourselves in a similar situation in connection with the “unidentified accounts” matter. Our bank was founded in 1952 so there was certainly no unidentified accounts coming out of the war. We decided to pay anyway. Towards the end of the matter the actions were directed at all Swiss banks. If we wanted to continue with a US dollar clearing account, we had to pay. It didn’t matter whether we were guilty or not. We booked the payment as a solidarity contribution. Also at that time we wanted to simply conclude the matter.”
Do they really think this just conclude the matter so simply? Extortion at a grand scale.
as James Jatras so eloquently said…
Who is advising these people? How naive can they be? They really think an admission of guilt is the end of their ordeal, not just the beginning? Once the Mark of Cain is stamped onto their forehead it never comes off
Thoughts on the war and tales from the battlefield
All tax and compliance advisers for those who live outside the United States are living with the curse of U.S. citizenship know how difficult the tax and compliance issues are. No matter what your situation your life is expensive, difficult, and anxiety driven.
If the statistics are to be believed the vast majority of U.S. citizens abroad are NOT tax compliant. What does that mean from a practical point of view? It probably depends on where one lives. Canada may have the largest number of U.S. citizen residents. The city of London is probably the city with the largest number of U.S. citizen residents. Neither Canada nor the U.K. has been in the “eye of the IRS Storm”.
Professor Denis Kleinfeld writing in FATCA – Predictions of Implementation Failure Proving True (a well researched, well organized and well thought out article that is the perfect antidote to Robert Stack’s FATCA Myths coming from Treasury) writes:
The US Justice Department has taken the position that the entire non-US financial industry is potentially part of a continuing criminal conspiracy with some US individuals and multi-national companies to evade US income tax. The Justice Department has unilaterally forged ahead to obtain indictments and convictions over prominent foreign banks, bankers, and some of their US customers. The United States justification for claiming the moral high ground is that it is merely seeking to have all US taxpayers pay tax as required under US law.
Switzerland is in the eye of the storm. The Obama IRS war on the world began in Switzerland. Switzerland remains the centre of the war. The war with Swiss opposition to FATCA growing, and the war may end in Switizerland.
The primary soldiers include:
The U.S. Department of Justice, The Swiss Government, The Swiss Banks, The Swiss Bankers, U.S. citizens in Switzerland who are tax compliant and U.S. citizens abroad who are NOT tax compliant. There are a number of issues and a number of moving parts.
The purpose of this post is to share with you a report direct from the Swiss battlefield. It comes to us via war correspondent/reporter Jonathan Lachowitz who runs White Lighthouse Investment Management in Switzerland. I was introduced to his report from Geneva Launch who wrote:
GENEVA, SWITZERLAND – The Thanksgiving holiday that just ended wasn’t much of one for a number of Americans and former US citizens living in Switzerland who received letters from their Swiss banks.
The letters are being sent out, starting last week, as the banks scramble to decide if they will take part in the “US programme” to settle claims the US Justice Department may have against them for helping “US persons” to avoid American taxes.
The group receiving letters consists of current and former US citizens who legally reside in Switzerland, according to Jonathan Lachowitz, a financial specialist who works with a number of Swiss and American financial institutions.
Ed. note, 5 December: Lachowitz has just published a lengthy paper on the subject, on the banking page of American Citizens Abroad’s web site.
Mr. Lachowitz’s paper is a MUST read. It gives insight into the interests and perspectives of all the perspectives! To whet your appetite:
Happy Thanksgiving: Swiss Bankers and US Clients Battle over the Wishbone, who will win?
November 28, 2013
By Jonathan Lachowitz CFP® Professional (Switzerland and USA)
As the 5 year old financial hostilities continue between the US Department of Justice and the Swiss Banking Industry it looks like the peace will be more expensive than the war. The financial reality from the August, 29th 2013 Joint Statement between the US Department of Justice and the Swiss Federal Department of Finance is beginning to be felt. The senior management of each Swiss Bank, which is not already under a formal criminal investigation by the US Department of Justice, is deciding whether or not to enter the Program, whether to aim for a Non Prosecution Agreement (Category 2) or the much harder to qualify for Non-Target Letter (Categories 3 and 4), and how to gather the required data to minimize the potential fines owed to the US Government. The focus of this article will be the relationship between the Swiss Banks, their US Citizen / US Resident Taxpayer clients (and former clients) and how the interactions with the other actors such the tax and legal advisors, independent asset managers and the IRS are developing in this Shakespearean Drama.
We pick up the story in November, 2013 while Americans living in Switzerland, especially the ones who have been largely tax compliant in the US and Switzerland, find themselves as the collateral damage; being locked out of much of the Swiss and US Financial System, facing the annual Sisyphean task of completing accurate and timely US tax filings, paying a King’s Ransom to the IRS and a plethora of tax and legal advisers and now being faced by the latest insult, an urgent request from their Swiss Banks:
- Required reading for countries considering a #FATCA IGA with the US (renounceuscitizenship.wordpress.com)
- #FATCA is sure to create and exacerbate tensions between Homelanders and #Americansabroad (renounceuscitizenship.wordpress.com)
- #OVDP for financial advisors – coming soon to a bank near you! (renounceuscitizenship.wordpress.com)
- The #FATCA IGA aka #OVDP for countries (renounceuscitizenship.wordpress.com)
- Swiss banks cleared to take part in US tax deal (boston.com)
- Swiss Banks Warned To Cooperate With Regulatory Body (eurasiareview.com)