List of Foreign Financial Institutions Swells To 53
The landscape for Swiss banking has dramatically changed over the past decade. At the turn of the 21st century, Americans (as well as residents from countries around the world) were able to establish and maintain foreign bank accounts in Switzerland that would remain off of the radar for tax purposes in their home countries. But with the new century came a new offensive against those taxpayers who held an interest in secret accounts and the banks that established and maintained those accounts. The new aggressive strategy has been paying off for the United States as a large number of Swiss banks have entered into deferred prosecution agreements that involve the flow of foreign account information directly to the IRS. Today, the Department of Justice announced that they have come to terms with yet another Swiss bank, which could spell trouble for thousands of U.S. residents.
After the threat of prosecution of several large Swiss banks, the Department of Justice effectively scared over 50 banks in Switzerland into taking part in the Swiss Bank Program, a program that provides Swiss banks with the assurance that they will not be criminally prosecuted if they agree to pay penalties and fully cooperate with investigations conducted by the United States.
According to a press release by the Department of Justice, BHF-Bank (Schweiz) AG (BHF) and the DOJ have come to terms under the framework of the Swiss Bank Program. Government authorities allege that the Swiss bank, established in 1974, provided services to its clients that bank officials knew would assist in the violation of United States laws with regard to foreign account disclosure. Since entering the Swiss Bank Program, BHF has taken steps to notify its customers to take advantage of the voluntary disclosure programs that their home countries offer. This was a vital warning, as under the terms of the program, BHF will essentially open their records to the IRS and Department of Justice to be inspected. If an American’s information is discovered during the investigation, the IRS will make a determination as to whether the taxpayer declared his or her foreign bank account and if not, if he or she failed to do so willfully.
If a taxpayer is found to have willfully failed to file documentation that is required by the Foreign Bank Account Reporting (FBAR) laws, he or she will have their case turned over to the IRS Criminal Investigations Division and the Department of Justice for prosecution. In addition to a penalty of 50% of the high balance of the foreign account, the taxpayer will also face a lengthy federal prison term. Although the Department of Justice has not explicitly revealed what they believe to constitute “willful” behavior, they have said that if the bank that the U.S. taxpayer established their account is one that has entered the Swiss Bank Program, the taxpayer’s failure to declare their account will likely be construed to be willful. Each time a Swiss bank enters the Swiss Bank Program, their name is added to the IRS List of Foreign Financial Institutions or Facilitators. With the addition of BHF, the list has grown to 53 Swiss banks.
If you have a foreign bank account at a Swiss bank that has not yet been disclosed to the IRS, your window to get right with the government without going to prison is quickly closing. The IRS has set up with Offshore Voluntary Disclosure Program (OVDP) that allows a taxpayer to declare their foreign account, pay any back-taxes, interest, and a reduced penalty in exchange for the DOJ’s word that the taxpayer won’t be criminally prosecuted, which effectively takes prison time off of the table. But the OVDP is only available for those who are accepted into the program before they have an investigation opened with regard to their tax affairs. Thus, a taxpayer will likely not be able to participate in the OVDP if the government has already received incriminating evidence about an undeclared foreign account from a Swiss bank and has opened an investigation.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have a plethora of experience in assisting taxpayers with issues relating to foreign bank account reporting and participation in the OVDP. Disclosing your financial affairs in hopes of a non-prosecution agreement is a big decision and only an experienced tax attorney is qualified to help you make it. Ensure that you have a zealous advocate fighting for your physical and financial freedom. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.
