(Bloomberg News) Credit Suisse Group AG, Switzerland's second-biggest bank, told U.S. clients it is giving confidential client account data to the Swiss tax authorities, who will decide whether to disclose it to the Internal Revenue Service.
The U.S. is probing whether Credit Suisse helped Americans evade taxes, and the IRS used a 1996 tax treaty to request data for certain accounts held between 2002 and 2010, according to a Nov. 2 letter sent to a client by the bank. The IRS sought data for accounts owned through domiciliary companies in which clients are the beneficial owners, according to the letter.
The Swiss Federal Tax Administration issued an "immediately executable" order to the Zurich-based bank, which has no right to appeal, according to the letter. Taxpayers can consent to the SFTA handing over their account data to the IRS, or they can use the Swiss legal system to appeal a ruling by the SFTA that their account must be given to the IRS, according to the letter.
"Please be advised that Credit Suisse is not able to provide any information on whether or not information with respect to a specific account will be provided to the IRS," according to the letter, signed by managing directors Michel Ruffieux and Stephan Gussmann.
Credit Suisse said July 15 that it's a target of a criminal probe by the Department of Justice over former cross-border private-banking services to U.S. customers. On July 21, seven Credit Suisse bankers were indicted on a charge of conspiring to help U.S. clients evade taxes through secret accounts.
The U.S. is conducting criminal probes of 11 financial institutions. U.S. and Swiss officials are concluding talks on a civil settlement that will probably require Swiss banks to pay billions of dollars and hand over the names of thousands of Americans who have secret accounts, two people familiar with the matter said on Oct. 24.
"In connection with the IRS treaty request, the SFTA has issued an order directing Credit Suisse AG to submit responsive account information to the SFTA," the bank said in a statement.
Tax attorney Barbara Kaplan said she has gotten phone calls seeking guidance from Credit Suisse clients who got letters.
"They are concerned and exploring what it means for them," said Kaplan, of Greenberg Traurig LLP in New York. "People who are receiving this letter are exposed to disclosure down the road. Those people who have had their accounts disclosed will be subject to civil tax penalties by the IRS and potential prosecution by the Justice Department."
U.S. taxpayers can avoid prosecution by voluntarily disclosing their account to the IRS, she said.