U.S. Aggressively Pursuing Taxpayer Information from Other Countries

While negotiations with the Swiss government over release of information from Swiss banking giant UBS AG has received a lot of press,  U.S. authorities have also been aggressively negotiating information-sharing agreements with other countries that have historically provided tax havens to U.S. taxpayers.   On September 8, 2009, the U.S. Treasury Department announced that the Principality of Monaco is the latest country, in a long list, to sign a bilateral information-sharing agreement with the U.S.   Under the agreement, beginning January 1, 2010, Monaco will provide information related to bank accounts held by U.S. taxpayers to U.S. authorities investigating civil and criminal violations of U.S. tax law.

With the global economic recession and diminishing tax revenues, U.S. authorities have negotiated information-sharing agreements with former tax havens such as Monaco with even greater vigor.   The U.S. government reached similar information-sharing agreements with Gibraltar (March 31, 2009) and Lichtenstein (December 8, 2008).   The U.S. government also has similar agreements with Jersey, Isle of Man, Guernsey, Aruba, and the Bahamas.   The bilateral agreements are modeled after theOrganization for Economic Cooperation and Development (OECD) Agreement on Exchange of Information on Tax Matters.   These agreements will significantly assist U.S. authorities with asset collection efforts and criminal prosecution on otherwise untouchable offshore accountholders.

Indeed, the international tide is turning against offshore tax evasion.  Singapore and Hong Kong have recently expressed willingness to abide by information-sharing agreements modeled after the OECD, amending their tax laws.  Even the Swiss Federal Counsel, expressed an intent to adopt Article 26 of the OECD’s Model Tax Convention.   If adopted, the OECD agreement would require Swiss banks to disclose banking records for suspected tax evasion by foreign accountholders, which would include many more U.S. UBS accountholders.