by Brian Mahany
Recently we posted a story on LinkedIn on how the IRS stumbled across a Swiss accountant’s client list. That list resulted in the accountant’s indictment as well as several of his U.S. clients. All are charged with tax evasion or failing to report foreign bank accounts. With today’s modern technology, it is becoming harder and harder to keep secrets. What made the Swiss accountant’s story so interesting is that he accidentally mailed a paper copy of his client list; a copy that wound up in the hands of the IRS.
In response to the posts about that story, British solicitor Andrew Grossman had this to say, “There has always been leakage of “secrets” in relation to secret Swiss bank accounts… Once it became possible to download whole databases onto a thumb drive nobody should have pretended that there was any security for tax evaders.”
His comments are very accurate. One click on a computer and entire data bases can be sent electronically or stored on a tiny thumb drive. It is not as if a bank employee has to sneak out the door with banker boxes stuffed with information. In 2010, German tax authorities purchased stolen data regarding clients banking at Swiss bank Julius Baer. Prior to that in 2009, Germany reportedly paid a bank employee Heinrich Kieber $7 million US for information about customers at Liechtenstein bank LGT. They also provided him witness protection and a new identity.
These are the stories that are reported. If government tax authorities are willing to pay bank employees millions for client lists, we wonder how many other minimum wage bank employees have made other such deals. Andrew’ comments are very telling. With entire databases able to loaded on to a thumb drive in just a few seconds, how safe is your foreign account from disclosure. The answer is obvious.
Having a foreign bank account is entirely legal if properly reported. The Treasury Department requires Americans and other U.S. taxpayers (that includes green card holders) to report their foreign accounts annually on a Report of Foreign Bank and Financial Accounts more commonly called an FBAR or TD F 90-22.1 form. Failure to file an FBAR is a crime and can result in huge civil penalties including loss of the entire account.
If you have an unreported account, there is still time to come into compliance an avoid prosecution, audit and massive penalties. Beginning next year, however, the IRS will require foreign banks to begin identifying and disclosing accounts with ties to the United States or U.S. taxpayers. Although many countries have yet to agree to the terms of the new FATCA law (FATCA stands for the Foreign Account Tax Compliance Act), the IRS and Justice Department has proven themselves to be very adept at getting account data.
If you have an unreported account, seek professional guidance right away. Don’t rely on bankers that say your data is safe. Nothing is safe and the stakes are simply to high.
The tax attorneys at Mahany & Ertl have helped many people with a wide variety of foreign reporting issues. We can help with unfiled FBARs, criminal tax investigations, foreign real estate reporting, FATCA compliance, foreign gift reporting, voluntary disclosures, opt outs and the current Offshore Voluntary Disclosure Program (OVDI). Most of our services are offered on a reasonable flat fee basis.
Mahany & Ertl – America’s Tax Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine; Minneapolis, Minnesota and San Francisco, California. IRS tax services available worldwide.
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