An article in IFC Review, a leading offshore financial news service, has many folks asking questions. That article, titled Liechtenstein Moves to Shed Reputation as a Secretive Tax Haven, claims that the principality is embracing tax transparency. While there have been on-going negotiations with the U.S. Treasury Department concerning FATCA, nothing yet has been signed.
Liechtenstein is one of the most secretive tax havens in the world. Because of its reputation as a tax haven, banking is one of the country’s major industries.
The country boasts only 62 square miles of territory and just 36,000 people. Notwithstanding its size and population, it is one of the richest when measured by gross domestic product.
Liechtenstein has traded barbs with its neighbor Germany and with the United States over its reputation as promoting tax evasion. The country’s largest bank, LGT, is owned by the ruling monarchy. Germany accused the bank in 2008 of helping Germans evade taxes by setting up secret accounts at LGT. Liechtenstein’s Prince fired back that Germany paid someone to steal the bank’s customer list.
Since 2008, the world has moved closer to global tax transparency. Liechtenstein has quieted its rhetoric and has been in negotiation with the IRS since last year to implement FATCA. FATCA – short for the Foreign Account Tax Compliance Act – requires foreign financial institutions to review their customer and account records and report those with ties to the United States.
Earlier this week, IFC Review reported that the country was “ready to strike agreements with governments that would prise open once-secret accounts while providing a mechanism allowing evaders to come clean about their undeclared assets.” The country also said said that it would also sign the OECD’s Multilateral Convention on Mutual Administrative Assistance in Tax Matters.
What does this mean for U.S. taxpayers with accounts at LGT and other Liechtenstein banks?
It means time is running out!
The IRS offers several methods for those with unreported offshore accounts and unfiled FBARs to come into compliance and avoid the harshest of penalties. The present amnesty plan still requires a sizable 27.5% penalty but other options are available. Taxpayers that can prove that their failure to report their foreign accounts was not willful may be able to avoid all penalties.
Many of the IRS amnesty programs disappear once the IRS finds out about your offshore accounts or is provided your name on a list from a foreign bank or country. With Liechtenstein close to signing a FATCA agreement, time is truly running out.
For more information and a free review of your offshore reporting obligations, contact us today. Let an experienced FATCA attorney from our team do the worrying for you. We have helped taxpayers across the world and offer flat fees for our services. Because we handle so many FBAR penalty cases, we can perform our services for much less cost than many other tax lawyers.
Post by Brian Mahany, Esq.