by Brian Mahany
According to published reports, including a report in SwissInfo, a Swiss parliamentary commission has approved a proposal by the Swiss Federal Tax Administration for the turnover of account holder information to the IRS. Although the full parliament must approve the measure, observers believe such approvals will come before the year end. One vote may come as early as December 5th.
Swiss and American officials have approved a tax exchange agreement that allows US authorities to seek information regarding Americans holding accounts in Swiss banks. Long a secrecy haven, Swiss banks began to feel intense international pressure over the last several years. A $780 million fine paid by UBS in 2009 and recent US criminal charges against Credit Suisse bankers have put a tremendous amount of pressure on both Swiss banks and the government.
11 Swiss banks are reportedly under investigation by the U.S. Treasury Department and Justice Department. Although the names of the banks under investigation have not been disclosed, most believe the list includes Credit Suisse (which announced it will be disclosing names), Julius Baer, Basler Kantonbank and Wegelin. A Wegelin & Co AG bank director was arrested for money laundering by the FBI last year.
If you have unreported bank or brokerage accounts in Switzerland (or India, Israel etc), your time is running out. The IRS is cooperating with more countries, receiving more whistle blower tips and developing new data mining techniques to discover offshore accounts.
While having a foreign bank account is completely legal, not disclosing the account or using it to hide income from Uncle Sam is a felony. Penalties include prison and penalties as high as 50% of the high account balance for each year the account is unreported.
The IRS’ latest tax amnesty program (“OVDI”) ended earlier this fall but tax payers can still come into compliance and avoid criminal prosecution. Often significant civil penalties can also be avoided. All bets are off, however, if the IRS makes first contact.
If you have an unreported foreign account, contact a tax attorney immediately. It’s that simple. Waiting for the IRS to find you may work for some but the penalties simply don’t justify the risk for most.
Mahany & Ertl – America’s Tax Lawyers. Offices in Milwaukee, Detroit, Portland (ME) and San Francisco. Tax services available nationwide.