GENEVA, SWITZERLAND – Two new wrinkles appeared Monday 23 January in Swiss media stories surrounding the resignation of Swiss National Bank Chairman Philipp Hildebrand. French-speaking Switzerland’s largest circulation newspaper Le Matin Dimanche yesterday picked up on vague suggestions that have been appearing in German-language media since early January that his wife Kashya, who is American, could have problems with US Fbar (Foreign Bank and Financial Accounts) forms.
And Monday the special commission assigned the task of seeing if Hildebrand respected the central bank’s internal regulations confirmed its 21 December findings: Hildebrand was cleared, although the broader issue of moral responsibility for his wife’s currency transaction profits at a time when he was leading Swiss monetary policy remained.
The former chairman resigned 9 January, saying that he could not prove beyond a shadow of a doubt, once and for all, that it was his wife who had made currency transactions called into question by a stolen copy of a bank statement.
The two-person commission mandated by the Federal Council, the director and vice-director of the Swiss Federal Audit Office, Kurt Grüter and Michel Huissoud, reported to the Swiss government cabinet last week that after reviewing evidence they had not had access to earlier, e-mail exchanges between Hildebrand and Banque Sarrasin, they confirmed their previous conclusion that the chairman had stayed within the rules of the SNB.
Hildebrand case provides Swiss political fodder
The Hildebrand resignation has remained in the limelight in Switzerland, largely because the major political parties have been meeting during the past week to prepare their strategies for upcoming popular votes. The information about Hildebrand’s wife’s currency deal was broken to media by Christoph Blocher, former head of the right-wing UDC People’s Party, who last week talked about the affair for the first time, in an address to the party’s annual meeting.
It turned out, after Hildebrand’s resignation, that the most damning document shown to media was in fact several patched together by a lawyer and politician who is close to Blocher.
The latest twist comes not from political parties, but from Swiss media, with Le Matin Dimanche (print edition only) stating that Hildebrand’s wife has not filed her US Fbar forms—citing only “someone in the know”. The article, which is not labeled an editorial by Le Matin, concludes with a statement that is startling for its red herring, or ignoratio elenchi: “This silence on the part of the wife of the SNB’s president will undoubtedly have cost Switzerland something in its tough tax negotiations with the United States. The SNB president’s resignation will have helped ease the situation.”
Little that is clear in morass of US filing obligations: Kashya Hildebrand not alone
The article, like those earlier in Handelzeitung, Insideparadeplatz and Sonntagszeitung, confuses Americans’ tax obligations and financial reporting requirements: the Fbar requirement to announce the highest amount during a given year in all financial accounts to the Treasury Department is the result of anti-terrorism legislation and may have little or no impact on taxes owed.
The Lake Geneva region newspaper states without any clear proof that Hildebrand has not filed her Fbar forms for past years, unlike “many American citizens”, an assumption that flies against information circulating in the US overseas community. The US tax arm, the IRS, enforces the Fbar requirement, which is not filed with tax forms but separately. The IRS was given the task because compliance was so low, 20 percent in 2003. The figure may be rising due to hefty fines and more publicity, much of it negative within the American community abroad, where there is confusion over complex and changing rules, and strong opposition to the heavy reporting requirements and what are seen as disproportionate fines.
If Kashya Hildebrand has indeed not yet filed Fbar forms that are due, or if she is in arrears on US tax payments, only she and her husband are privy since even her US tax consultant is not obliged to be up to date on this. If this is the case, she is not alone.
Even US government employees lag on filing, payment
In addition to the possibility she is among the ranks of the untallied number of Americans who have not yet come to grips with the Fbar requirements, there are the US government employees who are behind on their taxes.
The Washington Post’s Federal Eye blog Monday 23 January wrote that
“Congressional staffers owed about $10.6 million in unpaid taxes in 2010, a slight increase from the previous year and a growing slice of the roughly $1 billion owed by federal and postal workers nationwide.
“The figures come as Republican efforts to pass legislation allowing federal agencies to fire tax delinquent federal employees have slowed and as the White House continues to crack down on improper payments made by agencies to delinquent government contractors and federal beneficiaries.
“About 98,000 federal, postal and congressional employees owed $1.03 billion in unpaid taxes at the end of fiscal 2010, according to records provided by the Internal Revenue Service.”