Swiss Bank Secrecy Laws and the U.S. Internal Revenue Service--Are the Swiss to Blame for Tax Dollars That the U.S. Internal Revenue Service Cannot Collect When U.S. Citizens Hide Their Money in Swiss Banks

Are The Swiss To Blame For Tax Dollars That The U.S. Internal Revenue Service Cannot Collect When U.S. Citizens "Hide" Their Money In Swiss Banks?To an American the thought of Swiss banks conjures up ideas of bank accounts registered to numbers instead of names, safe deposit boxes full of gold, and international wealth hidden behind the bank secrecy laws of a tiny country.Switzerland offers many advantages to the financially minded person in search of a unique capital market: a stable, freely convertible, sound currency; well-organized financial institutions in a neutral country; and a highly developed international communications and transportation market in a multi-lingual society. 1 The same bank secrecy provisions that make Switzerland so attractive to the investor serve to plague the U.S. Internal Revenue Service ("IRS"). 2 This Note will review the bank secrecy laws of Switzerland and the United States, the agreements between them that attempt to prevent the criminal use of Swiss banks, and the tax system used by the Swiss Government to prevent Swiss citizens from evading Swiss taxes by the use of their own bank secrecy laws.In addition, this Note will demonstrate that the United States is responsible for creating a treaty that permits its citizens to evade taxes by banking in Switzerland.1 Buzescu, Foreign Bank Operations in Switzerland, 19 INT'L L. 897, 899 (1985).See also H. MEYER SWISS CAPITAL MARKETS 2 (1983).2 The United States taxes its citizens based on their world wide income, when this income is hidden from the IRS the U.S. government is not able to tax it.account, no longer be allowed.W.