Swiss Banks Shun Americans as U.S. Compels Disclosure

[NeoConsSuck]

Source: Bloomberg.com

June 29 (Bloomberg) -- Swiss banks are shutting the accounts of Americans as the U.S. Internal Revenue Service accelerates the hunt for tax dodgers.

UBS AG and Credit Suisse Group AG, the country’s biggest banks, have told Americans to move their money into specially created units registered in the U.S., or lose their accounts. Smaller private banks such as Geneva-based Mirabaud & Cie. are closing all accounts held by U.S. taxpayers.

While the banks declined to say how many people are affected, more than 5 million Americans live abroad, including about 30,000 in Switzerland, according to estimates from American Citizens Abroad in Geneva. Swiss banks must register with the Securities and Exchange Commission to provide services for those customers.

<snip>
The IRS has since increased pressure on Americans to disclose offshore accounts as it seeks to recoup an estimated $50 billion in unpaid taxes. The agency set a deadline of Sept. 23 for taxpayers to declare all foreign accounts or face possible criminal prosecution that could result in as much as 10 years in prison and $500,000 in penalties.

U.S. citizens must file tax returns, report offshore accounts that contain more than $10,000 and pay tax on any income earned, no matter where they live. To take advantage of the amnesty program, taxpayers must file six years of returns, plus pay back taxes and a penalty, according to the IRS.


Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=a_8VwpO5m0WQ

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Isn't the USA the only country in the world where it's citizens are required to pay taxes to the USA regardless of where they live, or where the money was earned?

Didn't the Stones and Beatles move out of England for a time, to avoid the high taxes? So, I'm assuming something like that wouldn't apply to Americans?

[SemiCharmedQuark]

1. Haw Haw!

About time!

[truthisfreedom]

2. Nice.

[Wizard777]

3. Avoiding taxes is entirely legal. Evading taxes is not. There is a difference.

[No Elephants]

11. The difference is not always very clear, though. The IRS often labels an otherwise legal

business structure a "tax avoidance scheme."

[Wizard777]

18. It is the duty of business owners to arrange their affairs to pay the least amount of tax. L. Hand

Sounds like the IRS needs a another smack down from SCOTUS.

[bemildred]

21. Business owners can do whatever the fuck they like.

With a CEO or other similar employee, one can argue there is a duty to maximize profit. The argument there is about time; is it long term profitability or short term profit that one is supposed to worry about? If you bankrupt the company in successful pursuit of short-term profit, have you done your job? I think not.

[Wizard777]

25. That is another huge problem in Corporate America.

Many think their license to conduct business is a license to give people the business. That any crime, trespass or sin is excused by the profit made. What is getting my gaul right now is payroll deductions. If you are a minimum wage employee. If your register comes up 20.00 short. They will take it out of your check. Yet if you are the CEO of that same company making maximum wage (We can't think of a way to pay you more. So we'll cover that short coming with a bonus.) The corporate accounts can come up 20 million short. They don't take that out of their check or bonus. I think their should be a federal labor law that require that to be a uniform policy. If you will deduct losses from the pay of front line labor. You must also deduct losses from the Backroom and boardroom CEO's pay. That would also curb their tendency to take wild risks. When those wild risks turn to losses. They wouldn't have to come to the government for bail outs. The skilled labor would be backing their skills with their paycheck. Just like the unskilled labor would be backing their skills or lack there of with their pay checks. I think this is more appropriate to do to the highly educated skilled labor than under educated unskilled labor.

[closeupready]

17. Correct. Only one begins with 'a' and contains 'oi'. The other begins with an 'e'.

:)

[annabanana]

4. I'm sure that American banks can use the boost in liquidity..

And I KNOW the government can use the bucks of evaded taxes..

[davidpdx]

5. I agree it's unreasonable

However, US Citizens only have to pay taxes if they make over (I think) $85,000. Even if they don't we are required to file taxes every year. It's a royal pain in the ass, but if I ever decide to go back I'd rather not have the IRS after my butt. I don't make over the amount, so I pay nothing in US Taxes, but I pay taxes in the country I live in.

[Democracyinkind]

7. That's news to me. Do you know from which year the Korean-American Tax agreement is?

The way my brother ran it thru it would have cost me dearly even with my meager income (Student with 3 jobs) ... Have we been duped or does Korea have some kind of different agreement with the US than Switzerland does? The thing was that I would have to pay the difference between the US taxes and the Swiss taxes - if the US taxes are more than the Swiss taxes, I would owe the IRS the difference. And that is simply insane because in my situation the difference isn't peanuts, it's substantial. (Different measurements of income and wealth - while in Switzerland my income is seen as an addition to my being a student, the IRS sees it the other way around.... But your post has made me wonder... Maybe I should check the whole subject out again.

I pretty much gave up on the idea of ever living in the states again because of the tax thing. It would be interesting to find out if my sorrows were unfounded. Allthough I don't feel like changing anything, anyways.

[davidpdx]

9. There is an agreement between Korea and the US

That if you live in one and are from the other, you only have to pay taxes in one country. When I moved abroad, I had to file for the exception and have it indefinately (until I decide I want to move back)

[Democracyinkind]

10. That's strange. It seems the agreement between Korea and Switzerland is quite dissimilar.

I'll have to check this further out. Allthough I am in a different situation than you are: I live in one country but belong to both. I guess that's the significant difference. Maybe you'd be in the same situation than I am if you were also a Korean citizen in addition to being an american citizen.

[davidpdx]

20. If I took on Korean Citizenship I'd have to give up or renounce my American Citizenship

which I wouldn't do. Currently Korean law doesn't provide for dual citizenship, but that may change in the future. I can stay here in a long term visa though, so I get the best of both.

[Democracyinkind]

23. If you could get Korean Citizenship, make sure to check the subject of taxes first.

Like I said, for double citizens, it can be hairy.

[harmonicon]

13. I think it's more like $5,000, not $85,000

I've been living abroad as a student for two years now, so I haven't had to pay taxes. This past year I've done some part-time work, and now have some income, but I don't yet know if I have to file a tax return - the total I've made is still under $1,000. However, I think once you've made over the amount where you'd have to file with the IRS in the united states you have to file if you live abroad. I have some friends being hit by double taxation, and they certainly make far less than $85,000.

[davidpdx]

19. It could be different for students

But it is $85,000. It could also depend on whether there is an agreement between the country you are in and the US in terms of being hit twice. For Korea there is, so we aren't double taxed.

[comtec]

22. It's $85,000 but after conversion from Euros that's not much...

I live in the netherlands, and only make around 35k€uros, but that's about $50,000 (off the top of me head) with the current exchange rate of 1.41 dollars to one euro.

I currently pay about 30% in taxes. but that's ALL my taxes, I routinely paid 20% in just fica crap and another 10% from federal.
ironically my paycheck is about the same here - after taxes, as it was in California.

however here I have medical, travel - post tax money paid by my company - and a contract that says I have to be paid the balance of it if the company breaks it.

I don't exactly have job security, it's true i'm one of two people IN EUROPE who can do my job, but the economy is so bad they may consider one to be enough right now. My contract is up next month, and I haven't heard any word yet.

Anyway the way taxes abroad work is that you start your income for american tax consideration after that 85k.

Then you do standard deductions etc.

I file 0, actually pretty much all expats file 0 for the maximum deduction no matter how much they make (alot make over that because of the euro --> dollar conversions) and really what's the IRS going to do? we don't live at home, and the US government sure as HELL isn't any kind of protection for us anymore.

Since bush the majority of us expats just kind of lay low, saying we're Canadian (stars to sing O Canada~). Being from CA, I almost have something to be proud of, but everyone keep bringing up that fucking tard governator we have >.<

anyway that's the story on foreign taxes. it sucks, but there you go.

[BooScout]

27. No it's not....

I am looking at the Foreign Earned Income exclusion I filed this year and the exclusion is actually....$87,500.00. As far as I know that exclusion applies if you live in any country that has a tax treaty with the US....but it's always wise to check with the IRS when in doubt.

Filing and paying taxes are two different things. Check with the IRS if you don't know whether or not to file.

If your friends are being hit with double taxation, then they must be living in a country without a tax treaty.

[Democracyinkind]

6. It's not hard to get out of the double taxing if the circumstances are right.

You have to be careful though. My brother and I once ran thru the math of how much additional taxes we would have to pay in addition to the swiss taxes if we'd follow the book - we're both double citizens living in Switzerland - and it was mind boggling. Neither I nor my brother would be able to afford a decent life if we went by the books. I always wondered how that works out for other americans in Switzerland - I suppose someone who emigrated to Switzerland from the US while already on the IRS books doesn't really have a chance to get around it.

But I think the main concern of the article is about Americans who have their money in Switzerland but don't live here. That isn't a safe strategy anymore, since Switzerland will soon make a law stating that banking secrecy is a privilege of the Swiss living in Switzerland, no longer a privilege for the whole world willing to flee taxation. And that makes sense, since the banking secrecy law was primarily motivated to allow Jewish refugees in the Hitler era to make deposits that were secure from confiscation - not to encourage tax cheats. (as we all know, the plan didn't work out along those morally justified ideas)
So I think the main losers will be those 5'000 to 10'000 Americans, residing within the USA; who hold millions of Dollars out of sight of the IRS on Swiss bank accounts.

[boomerbust]

8. Phil Gramm

He's been awful quiet lately.

[No Elephants]

12. I wonder if any--or many--will renounce citizenship over this?

[Robb]

14. And lose their influence over policy? nt

[No Elephants]

29. What does citizenship have to do with influencing policy again?

[MicaelS]

15. The Beatles all became American citizens to escape the 95%

Income Tax that was in effect in the UK at the time.

[karynnj]

24. no they didn't

Paul McCartney is still a British citizen and has never been anything else. George Harrison lived in Britain too.
Ringo is a tax refugee in Monte Carlo, not the US
John lived in NYC, but never became a citizen - he had a huge fight to get and keep a green card - with nixon wanting to deport him.

[MicaelS]

26. I stand corrected, thank you for getting me straight! n/t

[BooScout]

28. Pardon me..........but BULLSHIT

Honestly. Where do people come up with this crap?

[Fedja]

16. USA is no exception

Europe has a policy of global taxation, meaning the following:

A European working abroad pays taxes to the country where he's working. However, if those taxes are lower than the ones he would pay at home, he still has to pay the difference to his domestic tax authorities.

Now that's extremely paraphrased, as EU legislation is a mess, but technically, if I worked in the US I'd still have to pay some 25% income tax to my country to reach the local tax burden limit. It makes sense somehow, if I liked the new country so much I'm free to swap citizenships and be subject to their system (such as healthcare etc).