by Brian Mahany
Previously we reported how U.S. authorities had detained two sons of a Swiss banker and questioned them for 6 hours about their father’s activities. That incident has caused a crisis within the Swiss banking world. Bankers are afraid to travel to the U.S. where they may be arrested and detained. Because other European countries also have an interest in unreported Swiss bank accounts (and extradition treaties with the U.S.), some lawyers are advising their banker clients not to leave the country!
The IRS and DOJ have been relentless in their pursuit of accountants, lawyers and foreign bankers who help Americans establish unreported offshore accounts. Next year, banks worldwide are required to turn over the names of Americans with foreign accounts. Some account holders, however, have tried to avoid detection by placing the account in a nominee name or in the name of some untraceable foreign corporation. To do that, most require the assistance of a banker, lawyer or accountant.
By targeting the bankers who opened the account, Treasury officials hope to get the names of other clients with similar accounts. When faced with prison, most bankers quickly make a deal with prosecutors and turn over their client lists. The recent prosecution of several Swiss and Indian banks and bankers have bankers very worried.
New reports reveal that a Swiss privacy group is seeking to block bankers from cooperating with U.S. authorities. Unfortunately for them, it may be too late. Earlier this year Switzerland turned over thousands of records to U.S. authorities, however the data was encrypted while negotiations between the two countries were on going. A recent news article now suggests that the IRS was able to access enough information to determine the identities of Swiss banking officials. That has caused fear among bankers throughout the country.
While the recent media attention has been focused on the Swiss bankers, the news is not good for U.S. taxpayers with unreported accounts. Between the new FATCA law implementation and the aggressive prosecution of bankers, the window for those with unreported foreign accounts is quickly closing.
If you have an unreported account, consider the IRS’ amnesty program (2012 Offshore Voluntary Disclosure Program, sometimes called “OVDI” or “OVDP”). The penalties are stiff but much lower than if the IRS finds you first. An added bonus of OVDI is the avoidance of an audit and criminal prosecution.
Taxpayers with small balances and those who truly didn’t know they were required to annually report their offshore financial holdings may do better with an opt-out or traditional disclosure. In some instances, the IRS may waive all penalties, although expect an audit to prove your innocence.
U.S. taxpayers, that includes dual nationals and green card holders, are requires to file an FBAR (Report of Foreign Bank and Financial Accounts) annually. If you have not done so, there are options but delay isn’t one of them. If the IRS finds you before you come forward, all bets are off and amnesty is no longer an option.
Consult with a tax attorney or CPA experienced with foreign reporting requirements. The tax lawyers at Mahany & Ertl have helped many foreign born Americans, dual nationals and Americans with foreign accounts. Whether your money is in a Swiss account or in India, China or Korea, we can help.
For more information, contact attorney Bethany Kroes at firstname.lastname@example.org or by telephone at (414) 223-0464. All inquiries are protected by the attorney – client privilege, even if you do not hire us.
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