US, Switzerland complete tax negotiations

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June 19, 2009

By Martin Crutsinger The Salem News Fri Jun 19, 2009, 11:54 AM EDT

WASHINGTON (AP) — The United States and Switzerland have agreed to increase the amount of tax information they share to help crack down on tax evasion.

The Treasury Department said Friday that the two nations concluded negotiations on an amended tax treaty. The discussions took place as U.S. legal authorities are conducting investigations into allegations that giant Swiss bank UBS AG helped thousands of American customers evade taxes.

Treasury Secretary Timothy Geithner said the Obama administration was committed to reducing offshore tax evasion.

"This treaty will increase our ability to enforce our tax law and will help bring an end to an era of offshore accounts and investments being used for tax evasion," Geithner said in a statement.

The protocol, which the two countries are expected to sign in the next few months, would revise the existing U.S.-Switzerland treaty to allow for a greater exchange of information as permitted by a model income tax convention adopted by the Paris-based Organization for Economic Co-operation and Development.

The negotiations over a strengthened tax treaty were taking place as U.S. authorities have been pressing UBS to hand over the names of 52,000 clients suspected of tax evasion, a move the bank has argued could break Swiss privacy laws.

UBS already has paid $780 million in fines and restitution to settle allegations it helped American customers evade taxes.

Since taking office in January, the Obama administration has been pushing initiatives to close loopholes that have allowed U.S. investors to evade taxes by using offshore tax havens.

At the Group of 20 leaders summit in London in April, President Barack Obama backed efforts to boost adherence by all countries to international standards for exchange of tax information as part of a package of initiatives that were adopted to deal with the global economic crisis.

Obama's budget proposals to Congress also include increased support for the Internal Revenue Service to reduce the amount of taxes lost through the illegal use of hidden accounts by wealthy investors.

Besides Switzerland, Treasury also recently concluded tax information exchange agreements with Gibraltar and Luxembourg.

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