by Brian Mahany
It’s become a full time job trying to keep up with the number of banks cooperating with US Treasury officials – that or subject to IRS “John Doe” subpoenas, criminal investigations or intense diplomatic pressure. Within the last 12 months, the U.S. has targeted Swiss, Indian, Israeli and Caribbean banks in its quest to uncover Americans with unreported foreign bank accounts.
The pressure is working. According to an article in Accounting Today, Swiss bank Clariden Leu has agreed to turn over records.
Clariden Leu has been in existence since 1755, before the U.S. was even a country. During that time it has built a reputation for private banking. The privacy is soon going to change.
Offshore bank and brokerage accounts are not illegal. There are a host of reasons why they make sense, especially in turbulent economic times. The IRS gets involved when the accounts are not disclosed or income from those accounts is not declared. The penalties for unreported income or accounts range from criminal felony prosecution to severe penalties – 50% of the high account balance – and the IRS can go back years and years.
Although the IRS’ offshore tax amnesty program (“OVDI”) ended, there are still opportunities to come into compliance and avoid jail and minimize penalties. Many holders of offshore accounts are dual nationals, foreign born Americans or green card holders with U.S. tax filing obligations. These folks often do not even know what they are doing may be illegal. Many accountants unfortunately do not even understand FBAR and foreign reporting requirements.
If you have unreported foreign accounts or offshore income, contact an experienced tax attorney immediately. Time is not on your side. If the IRS contacts you first, all bets are off and settlements become much more difficult.
Mahany & Ertl – America’s Tax Lawyers. Tax offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & San Francisco, California. Services available anywhere.