In July and September 2019 we informed about the consequences of the entry into force of the 2009 Protocol to the Swiss-U.S. Double Taxation Treaty and, in particular, the new possibility for the U.S. Internal Revenue Service (“IRS”) to issue group requests in connection with the FATCA reporting of Swiss Financial Institutions (“SFIs”).
This recently became reality when, on 15 October 2020, the IRS for the first time requested administrative assistance from the Swiss Federal Tax Administration (“SFTA”). The IRS wanted to obtain information from thirteen SFIs concerning recalcitrant U.S. accounts and accounts of nonparticipating FFI that were reported to the IRS in aggregated form for the years 2014 to 2019.
On 1 December 2020, the SFTA published the list of the thirteen SFIs included in this first wave in the official “Federal Gazette” and on their website (see here). This publication also serves as a notification to all persons entitled to appeal (i.e., the contracting parties, their legal successors and any other parties to the account relationships concerned) to the SFTA, as required by law. They have 20 days from that date if they wish to appeal against the intended transmission of their data to the IRS.
We expect that the IRS will be issuing more group requests in the coming weeks and months in relation to other SFIs. Our experience so far has shown that SFIs often have difficulties with preparing the files required for delivery to the SFTA. It is therefore highly recommended that SFIs that have not already prepared for this occasion prioritize this now before a group request arrives.
Our work in this area has also shown that certain SFIs interpreted the classification and reporting of Passive NFFE / NPFFI accounts differently than the SFTA. This resulted in having to redo previously FATCA reports. This has made the preparation process even more onerous.