by Brian Mahany
First it was the Caribbean. Then UBS in Switzerland. Then HSBC India. Now the list of offshore banks under investigation is so long that its difficult to track. Earlier this year, Reuters leaked a story that the IRS and Justice Department had started an investigation on 11 Swiss banks. Today we learned that the number of Swiss banks under investigation is much greater.
A recently departed former Assistant United States Attorney confirmed today that the number of Swiss banks under investigation is 17. That number is likely to grow.
Credit Suisse is probably the largest bank under investigation, however Clariden Leu, Basler Kantonbank, Wegelin and Julius Baer are all believed to be on the list. Our source confirmed that the feds are now looking at banks in Singapore and Malaysia as well.
By my unofficial count, 21 foreign bankers have been prosecuted by US authorities in recent years. Most of those were charged with helping US taxpayers evade taxes. What does this mean for taxpayers? Plenty.
The IRS shows no signs that it is slowing down in its quest to locate Americans with unreported foreign accounts. Although offshore bank and brokerage accounts are completely legal, using them to conceal income or assets is a felony. Through the use of “John Doe” subpoenas, foreign tax exchange agreements, international treaties and criminal prosecutions, the feds are getting banks to cooperate and turn over the names of American account holders.
Some foreign banks tried to help Americans evade detection by creating trusts and nominee account holders. Those efforts are also failing. When faced with prison, most bankers are only to eager to turn over names.
If you have a foreign bank or brokerage account, you must disclose it to the IRS if the accounts hold more than $10,000. Accounts are disclosed by filing a Report of Foreign Bank and Financial Accounts or FBAR. Accounts must also be disclosed on your tax return if you file a Schedule B. (Most foreign account holders do file a Schedule B.)
Obviously any income – interest, dividends or capital gains – must also be reported.
If you haven’t filed an FBAR or declared offshore income, time is running out. Although the government’s tax amnesty program (called the Offshore Voluntary Disclosure Initiative or OVDI) ended earlier this year, there are still ways to come into compliance and avoid prosecution and perhaps significant penalties. All bets are off, however, if the IRS contacts you first.
If you have unreported accounts or income, call us. We are tax lawyers and understand the complexities of foreign reporting requirements. Your call is kept absolutely confidential. The risks of getting caught are high and getting worse every day.
For more information, contact attorney Brian Mahany at (414) 704-6731 (direct) or by email at
Mahany & Ertl, LLC – America’s Tax Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & San Francisco, California. Services available everywhere.