Unfiled FBAR? Some Swiss Banks Now Offering Financial Incentives to Customers for Compliance Costs
Unexpected good news for some folks with unreported offshore accounts! After the U.S. Justice Department levied record fines against Swiss banks UBS and Credit Suisse, several offshore banks are offering financial incentives to coax their U.S. clients to self report their offshore accounts. The pressure on Swiss banks has never been higher since the United States began going after banks for assisting their U.S. clients in hiding offshore accounts. (Switzerland’s oldest private bank, Wegelin & Co., closed its doors after being criminally prosecuted by U.S. prosecutors.)
The United States continues to aggressively pursue unreported offshore accounts. The IRS’ ultimate goal is to have everyone with foreign accounts properly file FBARs (Report of Foreign Bank and Financial Accounts) and pay taxes on any unreported income. The IRS believes there may be as many as 6 million or more U.S. taxpayers with unreported foreign accounts and unfilled FBARs.
Dozens of Americans have already been prosecuted. The government has found that he best way to find foreign accounts is to go after the banks. Opening a Swiss or other offshore account is legal unless you fail to disclose the account on your tax return and file an annual FBAR form. (Foreign financial assets with an aggregate value of less than $10,000 USD are exempt.) Banks get in trouble if they knowingly assist Americans open secret accounts.
Several Swiss banks helped Americans open accounts in nominee names or mail statements to offshore addresses. Now the Justice Department is going after those banks.
To help avoid huge Justice Department penalties and possible criminal prosecution, some Swiss banks are offering to help their U.S. clients report their foreign accounts. According to the Wall Street Journal, assistance ranges from paying for an initial consultation with a tax lawyer to even assisting with penalties.
Failure to file an FBAR form carries huge penalties for account holders. Those penalties are up to the greater of $100,000 per account or 50% of the highest account balance. The IRS is currently offering an amnesty plan called the 2014 Offshore Voluntary Disclosure Program (OVDP) but amnesty is only available if the IRS doesn’t find you first or subpoena your bank. That is a powerful incentive for Americans with unfilled FBARs to hurry up and file and take advantage of any financial incentives offered by the bank.
The Journal reports that banks offering assistance include Coutts (a division of the Royal Bank of Scotland), Union Bancaire Privee, Bank Coop and Zuger Kantonalbank.
The offers make sense for all parties. The banks reduce their penalty exposure and clients are going to caught sooner or later. Coming into compliance now may mean a large reduction in penalties and the ability to avoid criminal prosecution, although the statistical odds of prosecution remain quite low.
If you have an unreported Swiss or other offshore financial account, time is running out. The Foreign Account Tax Compliance Act (“FATCA”) is now in effect meaning banks, brokerage firms and even precious metal dealers worldwide are combing their accounts and assembling lists of accounts with suspected ties to the United States. Beginning next year those records will be disclosed to the IRS.
The best way to avoid the harshest FBAR penalties is to develop a compliance strategy now. If your bank will assist with those costs, even better.
For more information about FBAR penalties and to receive a complimentary review of your options and obligations, contact attorney Bethany Canfield at or by telephone at (414) 223-0464. Most services can be offered on an hourly or fixed fee basis and are protected by the attorney – client privilege.