According to the NY Times, Switzerland recently announced it would help global authorities pursue tax cheats.

The surprise announcement came after a similar shift by two other European tax havens, Liechtenstein and Andorra, on Thursday.

The moves deal the biggest blow yet to European traditions of banking secrecy and come amid a global crackdown on tax evasion. The three governments agreed to cooperate with authorities in the United States and elsewhere in investigating tax evasion and, under certain circumstances, to turn over data on accounts at banks headquartered within their jurisdictions.

“The adoption of the O.E.C.D standards is a significant signal that bank secrecy as it has existed for generations is coming to an end,” said Scott D. Michel, a tax lawyer at Caplin & Drysdale in Washington, D.C.

Switzerland is not abandoning its banking secrecy laws, but rather adopting the definition of tax evasion used by the 30-nation Organization for Economic Cooperation and Development.

Switzerland was placed this week on the O.E.C.D.’s list of uncooperative tax havens, which also includes Andorra, Austria, Hong Kong, Liechtenstein, Luxembourg, Monaco and Singapore. It has also come under pressure from the British prime minister, Gordon Brown, who last month threatened to disinvite Switzerland to a meeting in London next month of the Group of 20 leading nations. Austria and Luxembourg have also agreed to adopt the organization’s definition of tax haven.

Switzerland is home to a third of the estimated $7 trillion hidden offshore globally.

Switzerland, unlike the United States and many other countries, distinguishes between tax fraud and tax evasion, and does not consider tax evasion to be a crime. But by adopting the O.E.C.D. definition, it will now cooperate with countries with which it has information-sharing treaties in pursuing tax evasion.

Those countries must already possess names of clients suspected of tax evasion, and then ask Switzerland for assistance.

“The privacy of foreign clients not under suspicion will continue to be protected by Swiss bank-client confidentiality,” the Swiss Bankers Association said on Friday. “An automatic exchange of information is excluded.”

UBS, the Swiss bank, averted indictment last month and agreed to pay $780 million to the Justice Department to settle charges that it helped scores of wealthy Americans evade taxes through secret offshore accounts.

UBS declined to comment.

Here are some key facts about Switzerland’s bank secrecy:

BANK SECRECY:

- Sharing information about bank client data is a criminal offence in Switzerland. Banks are forbidden from handing over bank client data directly to foreign authorities even if requested to do so. Switzerland’s protection of banking secrecy goes back to 1934 when it passed a law imposing heavy penalties, up to and including prison sentences, for breaches of banking secrecy.
TAX FRAUD/TAX EVASION:

- Unlike most other countries in the world, Swiss law distinguishes between tax fraud and tax evasion. Tax fraud is a criminal offence that involves actively forging documents to hide income from the tax man. Tax evasion, which is defined as not fully declaring one’s income to the Swiss tax authorities, is an administrative offence, punishable with a fine as the law accepts that citizens can sometimes innocently forget data or make mistakes when filing their tax returns.

Tax evasion is distinct from tax avoidance, which is the legal exploitation of tax loopholes to minimise tax payments.

TAX INFORMATION SHARING

- Switzerland can share tax information under a so-called administrative process enshrined in tax treaties signed with the United States and other countries. Up until now, it has mainly shared information on tax fraud.

Banks supply information requested by foreign governments pursuing criminal investigations of individuals, but this does not automatically extend to tax matters.

Swiss law requires the other jurisdiction demanding the information to come forward with a detailed claim about a precise individual. Berne does not offer cooperation in the case of blanket requests for data.

THE UBS TAX FRAUD CASE

- UBS (UBSN.VX)(UBS.N), Switzerland’s largest bank, became the target of a U.S. investigation alleging the bank had helped thousands of Americans to hide money from its tax authorities in Swiss bank accounts. In a landmark settlement, UBS agreed to pay a $780 million fine in February. Berne also agreed to the transfer to the U.S. of a few hundred UBS client names even before a Swiss court had ruled on whether tax fraud had been committed.

EU SAVINGS DIRECTIVE

- Switzerland allows European Union account holders to keep their affairs secret by paying withholding tax on the interest of savings from their income instead.

Switzerland shares the bulk of the revenues collected in this way with relevant EU governments without revealing the identity of the EU bank account holders. The matter is regulated by the so-called EU savings tax directive.

It seems the reason Switzerland is now agreeing to bend on it’s bank secrecy policies is to gain some leverage in the U.S. investigation of it’s largest bank, UBS, which is alleged to have helped thousands of Americans hide money from the IRS in Swiss bank accounts.  With a new president and a need for more cash, the Swiss know the U.S. government is serious about pursuing this lost tax revenue.

source: Reuters, NY Times

The Internal Revenue Service is warning the public of a scam that could be lurking in your e-mail.

IRS spokesman David Stewart said “very official” looking e-mails alert people about a refund owed to them, but when it’s opened it can be “dangerous to you and your computer.”

“We’re getting reports of people getting an e-mail that appears to come from the IRS and tells recipients to respond to get their 2008 Economic Stimulus Refund,” Stewart said.

According to Stewart, if you have accessed a link or attachment in the bogus e-mail, you may have allowed the scammer to download malicious software to your computer and you should immediately scan for viruses and spyware, plus be alert for suspicious activity on your financial accounts.

“If you have actually responded to a scam e-mail by giving out your private information, you should immediately take steps to prevent identity theft. You may now be a prime target,” Stewart said.

Stewart said there are three things the IRS needs people to remember:

• The IRS never sends unsolicited e-mails about your taxes.

• If you get a scam e-mail, don’t access any links or attachments.

Anyone who receives suspicious e-mails addressed from the IRS should forward them to the IRS at phishing@irs.gov.

For more information about tax scams and a list of tax scams updated each year by the IRS, go to www.irs.gov. The IRS also provides information on its Web site to help taxpayers protect their personal and financial information.

I have been looking at the tax plans for both presidential candidates. I believe that both have good ideas and bad ideas. But it’s fair to say that we really don’t know if either of them will work.

It is true that Barack Obama’s plan is focused more on helping the “common man”, by providing tax relief to middle America - but at what expense?

Will a measly $1,000 a year really make the difference? How are we going to pay for it? The national deficit is growing at an alarming rate and additional tax cuts will just add to it.  This could have long term devastating effects on the economy and the value of the once “almighty dollar”.

On the other hand, John McCain’s tax plan calls for giving big business and the highest earners the larger tax cuts.  The “trickle down economics” of the republican plan doesn’t sit well with most Americans. But let’s be fair - it had worked in the past (some will obviously disagree).

So what is the right course to take on tax reform?  Everyone has ideas, but no one knows for sure.  I believe that giving the middle and lower classes a tax break can help the “psychology” of America.  It can help average folks feel like there is a future - that this economic crisis can be turned around.

The Obama plan calls for promoting and supporting domestic small businesses and that is great for America.  I believe that John McCain feels that same way, but he hasn’t really come across as the savior for the middle class.

I think both candidates agree that Alternative Minimum Tax must be eliminated. The tax reforms of 2001 expire in 2010 and AMT will tax more than 20 million Americans, if it is not changed.

John McCain’s plan calls for cutting the corporate tax rate to 25%, down 10% from the current 35%.  But will that only help big business?

Both candidates agree in health care reform. But again, it will cost trillions, yes trillions of dollars in the long run. Can we afford it - can we afford not to do it?

The bottom line is this: We won’t know what will work until a new president is elected,and the tax plan has time to mature.

I hate to say it - but most Americans want immediate gratification and middle class Americans deserve something to look forward to. The John McCain plan sounds great for big business and the wealthy - but what about the rest of us?

Tomorrow is the day Americans hit the poll and vote for their presidential choice.  According to many pundits and political analysts, Obama appears to be a shoo-in.  With that said, what are the implications for the common, middle class folks? And what about our taxes?

According to Barack Obama’s tax plan, more than 95% of Americans will get a tax cut while those making over a quarter of a million dollars a year will get an increase.  Here’s his tax plan in a nutshell:

Let’s say you are married (hopefully happily), and you make $60,000 a year and you own a home. You have two beautiful children, one who is a freshman in high school and the other is attending college.

Under the Obama Tax Plan, in 2009, you would get a $1,000 Work Pay Tax Credit, a $500 universal mortgage credit and a $4,000 college credit. The total savings could add up to $3,700 a year or a little of 6% of your annual income.

Let’s say you are married and your annual income is $85,000.  Then your family would be entitled to a $1,000 tax cut.

But what if you’re a single mom with 2 young children making $38,000 a year?  You would get a $500 work pay tax credit, a $500 universal mortgage credit and a $1,100 addition to the established child care credit. That is $2,100 or 5.5% more than under the current tax system.

If you are a 71 year old widow or widower making $33,000 a year, you would be entitled to $1,900.

These calculations are based on IRS Statistics of Income. The calculations are conservative because their may be other tax credits that you qualify for, including a $500 in savings from expanded Savers Credit and $2500 in savings per family from the Obama healthcare plan