Under a series of tax laws, intergovernmental agreements (IGAs), and international treaties, such as the Foreign Account Tax Compliance Act (FATCA), offshore banks are obliged to report certain U.S. account holders to the Internal Revenue Service. While this requirement applies to foreign financial institutions (FFIs) around the world, Swiss banks have received some of the U.S. government’s closest scrutiny – and some of the highest penalties. Continuing this trend is HSBC Private Bank (Suisse) SA (HSBC Switzerland), which in December became one of the latest Swiss banks to enter a deferred prosecution agreement (DPA) with the United States, according to a Department of Justice (DOJ) press release. Under the terms of the DPA, HSBC Switzerland must pay more than $192 million in penalties – compensation for “conspiring with U.S. taxpayers to evade taxes” by “concealing their offshore assets and income from U.S. taxing authorities” such as the IRS. If you have an account with HSBC Switzerland or other Swiss banks, or if you received a FATCA letter from your bank, you should discuss your foreign account reporting requirements with an experienced FATCA attorney – before you find yourself at the center of a foreign account tax audit (or worse, a criminal investigation).
Foreign Account Holders, Beware: IRS, DOJ Have a Long History of Targeting Swiss Banks
To regular readers, HSBC Switzerland’s DPA will likely sound like part of a familiar pattern, which reaches back at least as far as 2013. That year, the Department of Justice partnered with the Swiss government to announce an initiative known as the Swiss Bank Program, which – not unlike a voluntary disclosure – enabled participating FFIs to avoid prosecution by paying penalties, supplying information, and meeting other conditions.
Though the Swiss Bank Program was completed in 2016, as the DOJ originally announced here, numerous banks were investigated and penalized – often heavily – during its active period, continuing after the program ended. Just consider the timeline below, which only begins to scratch the surface:
- October 2014 – A web entrepreneur is charged over a Swiss bank account
- January 2015 – HSBC is raided in Buenos Aires, with a focus on Swiss accounts
- July 2015 – 60 Swiss banks are participating in the Swiss Bank Program
- December 2015
- Two more financial institutions enter the Swiss Bank Program (Cornèr Banca SA and Bank Coop AG)
- Five new financial institutions enter the Swiss Bank Program (Bank J. Safra Sarasin AG, Coutts & Co. Ltd., Gonet & Cie, Banque Cantonal du Valais, and Banque Cantonale Vaudoise)
- January 2016 – Union Bancaire Privée joins the Swiss Bank Program
- August 2016 – Swiss banker pleads guilty to U.S. tax evasion charges
- March 2017 – Credit Suisse is raided in London, Paris, and Amsterdam
- July 2018 – Swiss bank gives up more names of American customers (Bank Lombard Odier & Co. Ltd.)
In fact, just weeks after HSBC Switzerland entered its DPA, the DOJ announced that yet another Swiss bank – this time, Geneva-based Union Bancaire Privée, UBP SA (UBP) – would enter an amended non-prosecution agreement with the DOJ (subject, notably, to an additional $14 million fine).
According to the Department of Justice, HSBC Switzerland admitted to taking deliberate actions to “1) defraud the United States with respect to taxes; 2) commit tax evasion; and 3) file false federal tax returns” during the period from 2000 to 2010. The fraud reached its height in 2007, at which time the bank was, as HSBC Switzerland later acknowledged, holding more than $1 billion on behalf of U.S. clients. In an effort to conceal the fraud, the bank made extensive use of tax havens, including Panama and Liechtenstein, in which “nominee entities [were] established” to disguise the accounts’ true owners.
Under its DPA with the Department of Justice, HSBC Switzerland must pay a penalty exceeding $192 million. The penalty is comprised of three separate fines, including 1) over $60 million in restitution to the IRS; 2) a penalty of nearly $72 million, equivalent to “fees (not profits) that the bank earned on its undeclared accounts”; and 3) an additional penalty of nearly $60 million.
The Swiss Bank Program may be over, but, as the case against HSBC Switzerland exemplifies, the IRS and DOJ are continuing to exert steady pressure, endangering not only FFIs, but potentially, U.S. clients who bank with them. If you bank or invest with any Swiss FFI, you may be on the IRS’ radar already. The safest course of action is to consult with a trusted tax professional, like the international tax law attorneys at the Tax Law Office of David W. Klasing.
FBAR + FATCA Tax Attorneys for Swiss Bank Account Holders, Expats, & Non-Residents
Is your Swiss bank under investigation? Have you received an IRS notice regarding a foreign account audit, or a FATCA letter from your bank? Do you have unreported offshore accounts or investments, including checking accounts, savings accounts, mutual funds, hedge funds, partnership interests, or life insurance?
If you answered “yes” to any of these questions, you may be in danger of FATCA or FBAR penalties. Work with an experienced FBAR attorney who can help you avoid or minimize tax penalties by reporting your offshore accounts properly. At the Tax Law Office of David W. Klasing, we have more than 20 years of experience assisting expats, dual citizens, non-residents, and offshore account holders with international tax compliance issues. For a reduced-rate legal consultation with an FBAR tax compliance lawyer for expats living abroad in Switzerland or Swiss bank account holders, contact the Law Offices of David W. Klasing online, or call 24 hours at (800) 681-1295.
Note: As long as a taxpayer that has willfully committed tax crimes self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax prosecution, the taxpayer can be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously receive a break on the civil penalties that would otherwise apply. It is imperative that you hire an experienced and reputable tax defense attorney to take you through the voluntary disclosure process. As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, Kovel CPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results. See our Testimonials to see what our clients have to say about us!
See our Non-Filer Q and A Library
See our 2011 OVDI Q and A Library
See our FBAR Compliance and Disclosure Q and A Library
See our Foreign Audit Q and A Library
In addition to our staffed main offices in Irvine, the Tax Law Offices of David W. Klasing has unstaffed (conference room only) satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad and Sacramento.
Note: If you have concerns about the privacy of our initial or subsequent communication and are unable to easily travel to our Irvine / Orange County Main Office, consider scheduling a GoToMeeting to safely and securely establish an initial or maintain an existing attorney client relationship. With end-to-end encryption, strong passwords and top-rated reliability, no one is messing with your meeting. To schedule a reduced rate initial consultation via GoToMeeting follow this link. Call our office and request a GoToMeeting if you are an existing client. We are generally happy to travel to any of our appointment only satellite offices for a subsequent meeting in appropriate circumstances once a relationship is established via a signed engagement letter and the payment of an initial retainer or where enough retainer is available where a current client to cover the reasonable travel time and time required for the meeting.
Will it cost me more to hire the Tax Law Offices of David W. Klasing, who’s main office and the vast majority of the firm’s staff is located in Irvine California, but an appointment only Satellite office is close to my location, as opposed to a local company? Absolutely not! See our policies that address this issue here.
