Zurich bank told to turn over data

Swiss government responds to IRS request for help in getting names

November 09, 2011|By David Jolly, New York Times

Credit Suisse said yesterday it began informing some US clients by letter… (FABRICE COFFRINI/AFP/GETTY…)

Credit Suisse said yesterday that the Swiss government had ordered the bank to turn over account data on some wealthy US clients as part of the effort by the United States to crack down on tax evasion.

The bank, based in Zurich, said the Internal Revenue Service had recently asked the Swiss Federal Tax Administration for help in locating information on US account holders under a 1996 American-Swiss tax treaty. Credit Suisse said in a statement that the Swiss tax administration had responded with “an order directing Credit Suisse AG to submit responsive account information’’ to the Swiss authorities.

Alex Biscaro, a Credit Suisse spokesman in Zurich, said the bank had begun to inform some US clients by letter about the order, but he declined to comment further. Beat Furrer, a spokesman for the Swiss tax administration, declined to detail the nature of the request. Dean Patterson, a spokesman in Washington for the IRS, declined to comment.

The letters that Credit Suisse was sending to clients gave two options, according to Paul L. Behling, a partner at Withers Bergman, an international law firm: either consent to the account data being turned over to the IRS, or file an appeal with the Swiss authorities. Behling said that he would advise clients who believed they had a basis to appeal to do so, but that others should consider going to the IRS and trying to negotiate a lighter penalty.

Under US law, cheating the tax authorities can be punished with up to five years in prison and civil penalties.

Not all of the bank’s US clients are affected. The IRS provided the Swiss authorities with detailed information on the Credit Suisse clients in question, rather than with a so-called John Doe summons, suggesting they had obtained information about those individuals independently. The fact that the request was made under the existing treaty showed that there has been no global deal on client data.

“US officials are mining the data from the 30,000 people who have participated in the voluntary disclosure programs,’’ Behling said, referring to an IRS initiative to encourage people with hidden offshore accounts to come forward. Those who entered the program were required to identify the bankers and other advisers who helped them set up the accounts and offshore corporations.

“The initial focus of the IRS on Credit Suisse seems to be on US persons holding offshore accounts through corporations or trusts,’’ he said. “This is not the end of it.’’

The United States and several European countries - notably Germany, Britain, and France - have been seeking in recent years to ensure that their citizens cannot take advantage of Swiss banking secrecy to hide assets to evade taxes.