[Updated May 2019 – Important Information for Offshore Tax Evasion whistleblowers below.] As the government dramatically ramps up its efforts to ferret out unreported foreign accounts, reports of Swiss banks settling with the Justice Department become almost everyday news. Yesterday Societe Generale Private Banking S.A. and Berner Kantonalbank AG became the newest banks to settle with the United States.
Both Societe Generale and Berner Kantonalbank agreed to help the IRS find Americans who moved money to other banks and to assist in efforts to find taxpayers that hid assets from the government.
U.S. taxpayers with more than $10,000 in foreign financial holdings must annually report their holdings. Failure to report may be criminal and usually carries huge civil fines that can equal the highest historical balance of the foreign account. Those penalties can be levied even if that account is now liquidated and closed.
Obama’s Foreign Account Tax Compliance Act (FATCA) requires all foreign banks to begin culling through their records and report account holders or signatories with ties to the United States. Although FATCA applies worldwide and is now in effect, it hasn’t stopped the Justice Department from targeting specific banks that have helped Americans hide money or move money to other banks in the hopes of avoiding detection.
The Justice Department recently offered an amnesty to Swiss banks. Those banks that cooperate and pay a fine do not get criminally prosecuted. Switzerland’s oldest private bank, Wegelin, went under after being prosecuted in January of 2013. To avoid a similar fate, most Swiss banks are now cooperating or have signalled an intent to do so.
Societe Generale and Berner Kantonalbank will pay a combined total of $22.4 million to avoid prosecution.
In announcing the settlement, an IRS spokesperson said, “These two resolutions with Societe Generale Private Banking (Suisse) SA and Berner Kantonalbank AG represent the ongoing commitment by the IRS and the Department of Justice to ensure that U.S. taxpayers report foreign bank accounts and pay taxes on all income earned from those accounts.”
The IRS says that Societe Generale admitted that some of its bankers helped Americans hide their offshore accounts by using false names and putting the accounts in the names of nominee entities based in Panama and the British Virgin Islands.
It’s not just U.S. citizens or those with unreported Swiss accounts that should be worrying. The IRS foreign reporting rules apply to all U.S. citizens, American expats living overseas, green card holders and dual nationals no matter where they live.
Although the Justice Department’s amnesty program is aimed at Swiss banks, the IRS and Justice Department have acknowledged looking into banks in Brazil, India, Israel, the Caribbean, and Liechtenstein. An IRS official recently told an offshore fraud group in Miami that Latin American banks are being scrutinized as well.
FATCA requires all banks worldwide to begin reporting accounts with U.S. ties this year. Banks that don’t cooperate are subject to punitive withholding requirements and are more likely to come under criminal investigation.
Between FATCA and the government’s aggressive enforcement policies, hiding money offshore has become near impossible and certainly not worth the risk.
Updated List of Cooperating Banks:
- UBS AG
- Credit Suisse AG, Credit Suisse Fides, and Clariden Leu Ltd.
- Wegelin & Co.
- Liechtensteinische Landesbank AG
- Zurcher Kantonalbank
- swisspartners Investment Network AG, swisspartners Wealth Management AG, swisspartners Insurance Company SPC Ltd., and swisspartners Versicherung AG
- CIBC FirstCaribbean International Bank Limited, its predecessors, subsidiaries, and affiliates
- Stanford International Bank, Ltd., Stanford Group Company, and Stanford Trust Company, Ltd.
- The Hong Kong and Shanghai Banking Corporation Limited in India (HSBC India)
- The Bank of N.T. Butterfield & Son Limited (also known as Butterfield Bank and Bank of Butterfield), its predecessors, subsidiaries, and affiliates
- Sovereign Management & Legal, Ltd., its predecessors, subsidiaries, and affiliates
- 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 USA
- BSI SA
- Vadian Bank AG
- Finter Bank Zurich AG
- Societe Generale Private Banking (Lugano-Svizzera) SA
- MediBank AG
- LBBW (Schweiz) AG
- Scobag Privatbank AG
- Rothschild Bank AG
- Banca Credinvest SA
- Societe Generale Private Bank
- Berner Kantonalbank
UPDATE MAY 2019
This post was written several years ago. Since then, the number of cooperating banks has grown exponentially. There are very few places to hide money these days and many are not safe.
Since this post has been written, the feds have gone after banks across the world including Liechtenstein, Israel and the Caribbean. So many banks that the above list is woefully outdated. Today it is safe to assume that your bank is cooperating.
The newest frontier in the world of offshore tax evasion is offshore insurance and accounts held in nominee names. If you think you can create a company and use sham directors or create a string of offshore shell companies, think again. While it is harder to get caught, the government is also getting smarter. And more and more countries are cooperating with one another.
Having an unreported offshore account isn’t illegal but not reporting the account is. [We no longer handle offshore reporting for individual taxpayers – accountants today can usually always handle the job unless there is a risk of criminal prosecution. If you need someone to help you come into compliance, call us. We know several experienced CPAs well versed in offshore reporting.]
Whistleblowers and Offshore Tax Evasion
Many of the largest offshore tax prosecutions have come to light because of whistleblowers. One former UBS Bank director received a $104 million whistleblower reward.
If you have information about offshore tax evasion, contact us. You may be eligible for an award. We are seeking both banking insiders and those having information about individual high net worth Americans who may be evading taxes. With awards of up to 30% of whatever the IRS collects, the rewards can be quite high.
An advantage of the IRS Whistleblower Program is the ability to remain anonymous.
To learn more, contact us online, by email or by phone 202-800-9791. All inquiries are protected by the attorney – client privilege and are kept confidential. We also invite you to visit our IRS offshore tax evasion whistleblower page.