The Federal Administrative Court has given the go-ahead for more client data belonging to the Credit Suisse bank to be handed over to the United States Internal Revenue Service (IRS), although the move could still be blocked by an appeal.
It was second time lucky for the IRS in its search for American tax evaders. In 2011, it had filed a request for administrative assistance with the Swiss based on the double taxation agreement between the two countries.
Credit Suisse was accused of letting its employees help clients hide income and assets from the IRS. However, the administrative court turned down the original demand concerning one of the bank’s clients after he filed a complaint early last year claiming that the request was too general, notably lacking names to help identify customers.
Last July, the IRS submitted a new request with more precise details, leading the court to overturn its previous decision. However, it is still subject to a potential appeal to the country’s highest tribunal, the Federal Court.
For that to happen, lawyers will have to demonstrate that it is a fundamental legal issue, or that the case is particularly significant. This is allowed since parliament recently voted approved a change to legislation that previously excluded appeals against matters related to administrative assistance cases.
The administrative court ruled that the IRS was allowed to file a new request and that its initial decision was not final in this case. While client names are still not given this time round, the criteria used to identify suspected tax dodgers are sufficiently clear to accept the demand for assistance filed by the US.
However, the IRS will only be allowed to see the data concerning the particular client whose appeal was heard and for the case for which the request was filed.
Thirteen similar appeals related to the Credit Suisse data are still pending before the court in St Gallen. Over a year ago, the bank provided data related to another 150 clients who did not launch any legal action.
Handing over client data to the US authorities has been a headache for some time now for Swiss banks. In 2010, the administrative court determined that it was legal for UBS to hand over information about nearly 4,500 customers.
After that decision, the IRS began targeting Credit Suisse and other banks.