For several years we have been sounding the warning alarm for folks with unfiled FBAR forms. Our mantra has remained consistent, “Come into compliance now before the IRS finds you.” Many clients have reluctantly come forward and participated in the Offshore Voluntary Disclosure Program “OVDP” or the newer Streamlined Program. As long as it is not by a “quiet disclosure” (more on that below) it is imperitative to comply before the IRS finds you or obtains your name from a bank.
Even if the IRS hasn’t actually contacted you – first contact is usually by a notice – you may already be too late if the IRS already has your name from a cooperating bank or through other sources. Although the automatic information exchange mandated by FATCA hasn’t kicked in yet, the IRS still has many tricks up its sleeve and has been obtaining the names of tens of thousands of people with unreported foreign accounts.
The IRS has announced there will be no reduction in penalties if they have unreported accounts at the following banks:
- UBS AG (August 8, 20140)
- Credit Suisse AG, Credit Suisse Fides (August 8, 20140)
- Clariden Leu Ltd. (August 8, 20140)
- Wegelin & Co. (August 8, 20140)
- Liechtensteinische Landesbank AG “LLB”(August 8, 20140)
- Zurcher Kantonalbank (August 8, 20140)
- swisspartners Investment Network AG, swisspartners Wealth Management AG, swisspartners Insurance Company SPC Ltd., and swisspartners Versicherung AG (August 8, 20140)
- CIBC FirstCaribbean International Bank Limited, (August 8, 20140)
- Stanford International Bank, Ltd., Stanford Group Company, and Stanford Trust Company, Ltd. (August 8, 20140)
- The Hong Kong and Shanghai Banking Corporation Limited in India “HSBC India” (August 8, 20140)
- The Bank of N.T. Butterfield & Son Limited “Butterfield Bank” (August 8, 20140)
- Sovereign Management & Legal, Ltd. (December 19, 2014)
- Bank Leumi le-Israel B.M., the Bank Leumi le-Israel Trust Company Ltd., Bank Leumi (Luxembourg) S.A., Leumi Private Bank S.A., and Bank Leumi US (December 22, 2014)
The date following each of these banks is the cut off date established by the IRS. If you obtained or requested a preclearance letter before those dates, you may be eligible for the lower penalties. Obviously, if you had been actually contacted by the IRS before those dates, however, then the dates don’t apply.
There are over 100 Swiss banks presently awaiting a non-prosecution agreement with the IRS. We anticipate that once that occurs, the IRS will again modify its “no deals” list without warning.
In the case of unfiled FBAR forms and unreported foreign accounts, “no deal” means the 50% willful penalty will apply. That penalty is applied to the highest historical balance of the account.
Repatriating your foreign assets or closing your foreign account does not eliminate the penalty! Nor does doing a so-called “quiet disclosure” favored by some taxpayers. A quiet disclosure occurs when a taxpayer simply sends in their missing FBAR reports and amends their old returns in the hope that the IRS won’t ask questions.
We hate being the bearer of bad news. Even if you find your offshore account is on the above list, you must still comply to avoid possible criminal penalties and there still may be some things we can do to help alleviate the harsh bite of the IRS penalties. Unfortunately, for many taxpayers, their options are now severely limited.
Do not delay another day.
Have one or more years of unfiled FBAR forms or have other offshore reporting questions? We can help. Most services can be offered on a flat fee basis. For more information, contact attorney Bethany Canfield at or by telephone at (414) 223-0464. All inquiries kept in strict confidence and protected by the attorney – client privilege.