We've picked an interesting day to hold this discussion since today (09 Dec. 2013) is the day all Swiss banks must file a first stage delaration with the US DoJ (Department of Justice).
Swiss-US tax evasion deal could "kill" smaller Swiss banks. - swissinfo.ch
From the above article:
Swiss banks that are not already under active DoJ investigation could avoid criminal prosecution by applying for a so-called “non-target” letter by the end of the year under the terms of the Swiss-US deal.
But they could still be liable for huge civil penalties depending on when they opened accounts for US clients containing non-declared assets.
Accounts already in existence before August 1, 2008, would attract a fine of 20% of accumulated assets.
A 30% fine would apply to accounts opened between August 1, 2008, and February 28, 2009.
This levy would increase to 50% of accumulated assets of any undeclared account opened after February 28, 2009.
Note that all Swiss banks are considered by the DoJ to have encouraged tax evasion, and it is up to each bank to prove otherwise.
One of the larger Swiss banks have requested any client who is a US Person to submit their US tax return for verification indicating they have declared any account held by that bank on the return. The tax return must have been prepared by a certified Swiss (or multi-national) CPA firm. Many Americans abroad do not wish to employ expensive accountants, and may use TurboTax or they may have prepared their returns in the old fashioned pencil and paper method themselves (it is doable, with a fair amount of research) and therefore do not meet the criteria. In this case, the bank has no way of knowing if the return shown is accurate or the account has indeed been declared.
As can be seen from the quote above, the penalties are severe if one account is discovered to have not been declared.
Also in the article is a side box indicating the 4 groups used to determine the banks position as regards it's US Person clients for the DoJ response. Since the banks can not verify 100% compliance as mentioned above of any and all US Persons on their books, most are opting for category 2 even though they never encouraged tax evasion.
As a result, the best option appears to the banks to be one where all accounts are purged of any US Person (a costly seek and identify operation). Hence, it's preferable to have no US Persons on their books.
This may answer the question posed by kiki. "
I'm wondering if you are a dual citizen, why not open an account using the non-US citizenship. At that point, the local bank shouldn't know if you hold another citizenship"... Quite simply, the banks can not afford to get it wrong. And if discovered, nor could the US Person. Failure to answer the question correctly "
are you a US Person?" (which all banks will now ask when opening a new account) can be interpreted as wilfully evading a US tax obligation, and the penalty for that is severe.
