(Dec. 4, 2009) On November 17, 2009, the Swiss Federal Authorities gave a progress report on the processing of U.S. Internal Revenue Service (IRS) requests for information on the suspected tax evasion by U.S. residents who had banked with UBS AG, a Swiss bank (The Federal Authorities of the Swiss Confederation, UBS: Treaty Process on Track: Annex to Agreement Now Published in Switzerland's Official Compilation of Legislation, Nov. 17, 2009, at http://www.news.admin.ch/message/index.html?lang=en&msg-id=30132). In this statement, Switzerland reported that the Swiss Federal Authorities had processed 500 IRS requests for information on suspected taxpayers.
In addition, Switzerland published the criteria for granting assistance in these formerly disputed cases as an Annex to the underlying bilateral treaty, the Agreement Between the United States of America and the Swiss Confederation on the Request of Information from the Internal Revenue Service of the United States of America Regarding UBS AG, a Corporation Established Under the Laws of the Swiss Confederation (Text of the Agreement [in English], IRS website, Aug. 19, 2009, available at http://www.irs.gov/pub/irs-drop/us-swiss_government_agreement.pdf). Switzerland published the translated text of the Treaty and the Annex in its federal official law gazette, in German, French, and Italian. (German text: Abkommen zwischen der Schweizerischen Eidgenossenschaft und den Vereinigten Staaten von Amerika, Aug. 19, 2009, AMTLICHE SAMMLUNG DES BUNDESRECHTS 5669, at http://www.admin.ch/ch/d/as/2009/5669.pdf [Annex (Anhang) is at 5675-5678].)
These developments are the outcome of a deferred prosecution agreement of February 2009 between the United States and UBS (Contemporary Practice of the United States relating to International Law, 103 A.J.I.L. 325, 338 (2009) that in turn led to the August 2009 Agreement between Switzerland and the United States. In the Agreement, Switzerland promises to process 4,450 IRS requests for information concerning UBS accounts suspected of having been held between 2001 and 2008 by U.S. residents who evaded U.S. taxes.
The criteria published in the Annex of the Agreement, as promulgated by Switzerland, are more specific than article 26 of the Swiss-U.S. double taxation treaty, according to which information must be exchanged relating to tax fraud (Convention for the Avoidance of Double Taxation with Respect to Taxes on Income, with Protocol, U.S – Switzerland, Oct. 2, 1996, TIAS; KAV 4915). The criteria that have been declared as applying to the 4,450 requests specify that information will be provided for accounts suspected of having been owned by U.S. residents that were kept secret from the U.S. authorities and that held assets valued at some time between 2001 and 2008 at one million Swiss francs (CHF) (about US$983,000), while having earned a minimum of CHF100,000 (about US$98,300) for three consecutive years. A lower monetary threshold for disclosure was set for accounts that had involved sham transactions with offshore companies or had otherwise engaged in obviously fraudulent conduct. For such accounts, information was to be disclosed if the assets were valued at a minimum of CHF250,000 (about U.$215,750).
It appears that account holders for whom the Swiss government has decreed disclosure may request judicial review by lodging a complaint before the Swiss Federal Administrative Court. The decision of this Court would be final. (W. Frei & T. Rohner, Weitreichende Amtshilfe gegenüber den USA: Bisher geheime Kriterien sind nun offiziell bekannt, Neue Zuercher Zeitung, Nov. 18, 2009, at 31, LEXIS/NEXIS, NEWS Library, ZEITNG file.)