Suppose that you have an undisclosed offshore account with XYZ Bank, a Swiss bank. You received a declaration of consent from XYZ Bank requesting your consent to disclose your account information to the IRS directly. You refused.
Because you did not consent, your account became subject to aggregate reporting by XYZ Bank. Pursuant to the Swiss-U.S. FATCA Agreement, Swiss banks must report the number of accounts they hold for which the account holders have not given their consent, as well as the total value of such accounts, without disclosing the names of the account holders. This aggregate reporting procedure is complemented by an exchange of information upon request based on the Swiss-U.S. double taxation treaty.
The ink was barely even dry on the aggregate report submitted by XYZ Bank when the Swiss Federal Tax Administration (FTA) received a group request from the IRS. A group request is a request made by the IRS for specific information pertaining to a non-consenting U.S. account. The information sought includes the very type of information that a non-consenting U.S. account holder would just assume not turn over to the IRS. Specifically, it includes the identity of the beneficial owner(s) of the account.
Contrary to popular belief, a group request does not automatically mean that the FTA will release your account information to the IRS. Instead, it begins what can best be described as a review process. This review process can be divided into the following steps:
o Step 1: Upon receiving a group request, the FTA must do two things. First, it must publish the group request in the Swiss Federal Gazette and on its website, www.estv.admin.ch. Second, it must request the bank that is holding the information to identify the account holders involved and to provide it with all the relevant documents pertaining to the “non-consenting U.S. accounts.”
o Step 2: The U.S. account holder may submit a statement to the FTA opposing the transmission of account information to the IRS. The FTA will then review the group request along with any such statement.
o Step 3: The FTA will then issue a final decision, which will be published anonymously in the Federal Gazette as well as on the FTA website.
o Step 4: To the extent that this final decision is adverse to the interests of the U.S. accountholder (i.e., it authorizes release of the information requested to the IRS), the U.S. accountholder may appeal it to the Swiss Federal Administrative Court (FAC) within 30 days of its publication in the Federal Gazette. A copy of the appeal must be served contemporaneously on the FTA.
o Step 5: The FTA will review the appeal and may do one of two things. First, it may conclude that the appeal is justified. Or second, it may conclude that the appeal is unfounded. To the extent that the FTA concludes that the appeal is justified, it will reconsider its final decision and not transmit the information to the IRS. However, to the extent that the FTA concludes that the appeal is unfounded, it will submit a motion to the FAC seeking to dismiss the U.S. accountholder’s appeal.
o Step 6: Once the FTA submits a motion to dismiss, the FAC will spring into action. It will decide whether to grant administrative assistance and, if so, it will then decide the matter on its merits (i.e., whether the accountholder’s information can be released to the IRS). The decision of the FAC is final.
Conclusion
This is a technical area of the Swiss-U.S. FATCA Agreement that implicates the law of a foreign jurisdiction. Be sure to consult with an experienced tax attorney before proceeding.
One Response
(A reply for account information)I have a Swiss bank account. That was opened by a employer, about 30 years ago I need help finding out about my account. This was a holding,investment,charity donation.my boss that opened the account was undean bickerstaff.sun Louisiana,she was a telecommunications worker,