Two more Swiss banks have agreed to pay million dollar fines and cooperate with the United States government. Bank Linth LLB AG and Bank Sparhafen Zurich AG have settled this week with the Justice Department. Both the IRS and Justice have been zealously pursuing banks around the world that may have assisted Americans hide money.
Opening a Swiss bank account is entirely legal but only if the account is reported annually. Generally a U.S. taxpayer must report all foreign financial accounts if at any time during the year the aggregate value of those accounts exceeds $10,000 (measured in U.S. dollars). Reporting is done on Schedule B of the tax return and on a Report of Foreign Bank and Financial Accounts or FBAR form.
When it comes to places where Americans hide money, Bank Linth and Banks Sparhafen are rather small players. The Justice Department says the two banks combined only had 217 U.S. related accounts.
The message here is much bigger than the two small banks — No one is safe. If you have unreported accounts, the IRS will find you. Switzerland, Bahamas, India, Liechtenstein, Israel… the IRS is looking everywhere. Ditto no matter what the size of the bank or financial institution.
The IRS has amnesty options including a Streamlined Reporting program and an Offshore Voluntary Disclosure Program. Assuming you can prove that your failure to report was not “willful,” you may be able to opt out and challenge any penalties. Unfortunately, the IRS operates on a modified “first contact” policy. If they find you first – or if your bank agrees to cooperate – the IRS’ default position is no amnesty and penalties of 50% of the historical high account balance.
Think you can simply close your account and move the money back home? It’s too late for that as well. The IRS is looking at recent transfers from foreign banks.
There is no need to panic. The penalties are huge but depending on your situation, it is possible to eliminate most or all of them. Give us a call and learn your options and obligations.
Our initial consultations are free, without obligation and completely confidential. (Expat tax services, enrolled agents and even CPAs don’t share a client – professional privilege. Only lawyers have the lawyer – client privilege.)
For more information, contact attorney Beth Canfield at or by telephone at (414) 223-0464.
MahanyLaw – America’s Foreign Reporting and FBAR Lawyers