Questions? Feedback? powered by Olark live chat software

Some Banks Bail on Non-Prosecution Agreement – Don’t Be Fooled

Have You Received a Letter From Your Foreign Bank Regarding Required Reporting of Your Account to the U.S. Government Under FATCA? If So, Listen Up!
September 2, 2014
Taxpayers beware: Another international exchange of information agreement
September 18, 2014

Some Banks Bail on Non-Prosecution Agreement – Don’t Be Fooled

It is now no surprise to taxpayers around the world that the United States has trained their sights on not only Swiss banks, but on all foreign institutions that could be helping Americans hide money from the watchful eye of the U.S. government. Recent news of banks pulling out of previously made agreements with the U.S. may give taxpayers who have secret accounts false hope. It is important that you fully understand the risk that you are taking before you decide to do nothing.

The Agreements Regarding Reporting of Foreign Accounts

Ever since the U.S. government has been going after Swiss banks for helping Americans conceal their interests, foreign bankers, wealth management professionals and Americans with money tucked in overseas accounts have been on edge. In 2013, a U.S. court found Wegelin, a 273 year-old Swiss bank guilty on charges relating to the concealment of American taxpayer assets in their accounts. It turned out that the verdict was a knockout-blow and Wegelin closed its doors.

Much like the first munitions fired in the American Revolution, Wegelin’s conviction was a “shot that was heard ‘round the world”. Banks right and left entered into agreements with the United States to avoid prosecution. In return, the foreign banks agreed to go through their records and pass along any American account information.

A Change of Heart

The Department of Justice has not let up in their investigations of foreign banks and their account-holders that happen to be American. Though, a few banks have decided that they no longer want to participate in the agreement that could shield them from criminal prosecution. They have reasoned that if they are indeed targeted by the DOJ, it will cost them less to fight the battle out in court than it would to pour through all of their financial and account data in an attempt to sniff out American account-holder wrongdoing.

The Danger for Holders of Foreign Assets

Upon hearing this news, some taxpayers may rejoice, believing that their bank has decided to stick up for them and keep their accounts private. Such taxpayers could be making one of the biggest mistakes of their lives.

It is important to understand that when a bank is under investigation for allegedly assisting Americans in their effort to hide money in accounts overseas, they are not worried about the American taxpayer. Foreign banks are concerned about fines and other penalties that will be levied against it and once the government makes its case in court and it becomes obvious that the bank will be liable, you can bet that your financial institution will turn on you in any way that they can to reduce their financial burden.

Another harsh reality is the fact that some taxpayers think that without the bank’s cooperation, their secret is safe. This also couldn’t be any further from the truth. Thousands of taxpayers have been busted for not reporting their foreign accounts that exceed $10,000 and the government (most of the time) had little to no cooperation from the foreign bank. The Department of Justice and the Criminal Investigations Division of the IRS are some of the world’s most skilled investigators when it comes to financial crimes. If you have an undisclosed account in a foreign institution, they will find out and won’t hesitate to prosecute you.

The Solution

Taxpayers that have foreign accounts that have not filed an FBAR should seriously consider consulting an experienced tax attorney. You have a legal obligation to report your offshore account, even if it isn’t producing income for you. The Offshore Voluntary Disclosure Program offers the greatest amount of protection against prosecution and hefty fines and penalties. When you play hide-and-seek with your money and get caught, you will be facing the very real possibility of time in a federal prison and a money judgment against you that will take a lifetime to repay.

The tax attorneys at the Tax Law Offices of David W. Klasing have extensive experience in assisting taxpayers assess their situation and if the OVDP is appropriate, they can make sure that you aren’t paying a cent more than you absolutely need to. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.