February 15, 2013 - 09:14 AMT
PanARMENIAN.Net - Advancing a U.S. crackdown on tax evasion by Americans, the U.S. Treasury Department said on Thursday, Feb 14, that Switzerland and the United States have signed a pact to make Swiss banks disclose information about U.S. account-holders, Reuters reported.
The agreement is the latest in a series between the United States and other countries designed to carry out the Foreign Account Tax Compliance Act, or FATCA, enacted in 2010.
The Swiss deal is the first of its kind and differs in key ways from previous pacts. It requires Swiss banks to sign up directly with the U.S. Internal Revenue Service, while giving the banks a way to avoid violating Swiss financial secrecy laws.
FATCA requires foreign financial institutions to tell the U.S. Internal Revenue Service about Americans' offshore accounts worth more than $50,000. FATCA was enacted after a Swiss banking scandal showed U.S. taxpayers hid millions of dollars overseas.
The pact announced on Thursday, known as an intergovernmental agreement (IGA), needs to be ratified by the Swiss parliament. It does not need approval by the U.S. Senate. The deal has been close to completion since December.
FATCA imposes steep penalties beginning in 2014 on financial institutions that do not comply with the law. Banks and other financial institutions failing to comply could be frozen out of U.S. financial markets.
"We are pleased that Switzerland has signed a bilateral agreement with us, and we look forward to quickly concluding agreements based on this model with other jurisdictions," Acting Secretary of the Treasury Neal Wolin said in a statement.
The Swiss Bankers Association said it welcomed the FATCA deal but remains critical of the compliance and administrative burdens of the U.S. law.
In signing the pact, Switzerland joins Britain, Denmark, Ireland and Mexico as countries that have finished FATCA IGAs with the United States.