Date: 09/12/11
Topic: Foreign Accounts
Recently an article in Reuters titled “U.S. Obtains Data From 10 Swiss Banks in Tax Dodging Probe” was reported on the Huffington Post. Here is the link.
https://www.huffingtonpost.com/2011/09/10/us-tax-dodgers-switzerland-probe_n_956693.html
According to the article’s author, 10 major Swiss banks under now under investigation by Depart of Justice and have already provided detailed statistical information to the US government concerning US citizens with secret accounts with them. The banks have until September 23 to hand over more specific information.
The Justice Department served a target letter in July on Credit Suisse, Switzerland’s second-largest bank, notifying it that it was the focus of a criminal investigation. American authorities also are probing HSBC and smaller Swiss private banks and cantonal banks, including Basler Kantonalbank, Wegelin and Julius Baer .
It is highly likely that the U.S. citizens that refused and or failed to come forward in not one but two highly publicized voluntary disclosure programs that have the following three badges of fraud in their fact patterns will face criminal prosecution.
1. Unreported foreign income – this could consist on interest, dividends or capital gains related to investments in the foreign account, earnings in a foreign business, or foreign rental property.
2. Unfiled FBARS – or TDF 90-22.1
3. A failure to report the existence of the account under schedule B of their personal tax return.
It is important to note of the 24 reported cases where taxpayers were criminally prosecuted over a foreign account a pattern of skimming was also apparent. Skimming in this context is where the taxpayer commits income tax evasion by underreporting income on their U.S. returns, unusually by claiming false deductions, and then ships the underreported income to an offshore account in order to hide its existence.
If you still have not made a voluntary disclosure concerning your foreign account – it is still possible to come forward and report both your domestic and foreign non-compliance as long as the following is true.
1. All income is from legal sources. I.E. Illegal sources would be extortion, prostitution, drug sales est.
2. The government has not already received your name from a whistleblower or from its own sources. If you believe they might already have your name you still might be able to avoid criminal prosecution by coming forward before they act on the information they already have.
3. A whistleblower has not turned in your name
4. The IRS has not already opened up an audit against you.
You will not benefit from the penalty limitations of the previous two programs but you should be able to avoid a criminal prosecution.
The first step would be to obtain a pre-check on your social security number to see if you qualify.
Contact our offices if you would like to fully discuss this issue.
