Senator Rand Paul is blocking an amendment to a U.S.-Swiss tax treaty, slowing Switzerland’s handover of data on thousands of Americans with bank accounts hidden from the Internal Revenue Service, reports Bloomberg.
The protocol, negotiated in September 2009, would amend a 1996 treaty and make it more difficult for Switzerland to refuse requests from the IRS for tax information about U.S. customers of Swiss banks.
Senator Paul said the protocol is too “sweeping” and would threaten protections under the Fourth Amendment to the U.S. Constitution, which guards against unreasonable search and seizure. Paul said he is exercising his privilege to delay a Senate vote.
“We’re concerned about the due process of whether or not people have any kind of process before their records are looked at, the privacy of your banking records,” Paul said in an interview with Bloomberg. “There needs to be some constitutional protections to your banking records.”
The taxsters are flipping out.
Senator John Kerry, chairman of the Foreign Relations Committee, said failure to ratify the protocol hurts the U.S. overseas.
“The consequences are that we are lose credibility globally, in terms of our accountability,” said Kerry, a Massachusetts Democrat.
Tax attorney William Sharp, who represents clients with foreign accounts, said Paul’s objections to the protocol will hurt the U.S. enforcement of tax law, according to Bloomberg.
“We’re losing global credibility by mandating treaty concessions, obtaining those concessions, and then not approving them for almost three years,” said Sharp of Sharp Kemm P.A. of Tampa, Florida. “What Senator Paul and others don’t recognize is that the use of bank secrecy puts the IRS at a special disadvantage. When you go offshore, you’re off the radar.”