It is commonly said that all good things must come to an end. That seems especially true for the operations of Swiss bank Credit Suisse AG, with regards to their business practice of assisting Americans avoid U.S. income tax. Now, the Swiss mega-bank will have to pay approximately $2.1 billion to federal and state agencies as part of a sentencing order handed down in a federal court, last week. If you fail to report your foreign accounts by filing an FBAR, you could be facing harsh financial penalties, too.
According to a press release by the Department of Justice, U.S. District Chief Judge Rebecca Beach Smith of the U.S. District Court for the District of Virginia entered judgment and conviction against Credit Suisse on Friday. She also entered a restitution order in the amount of over $2.1 billion to be split between the IRS ($666.5 million), the Federal Reserve ($100 million) and New York State Department of Financial Services ($715 million). The remaining portion of the restitution ordered by the court will be deposited into the Justice Department’s Crime Victims Fund. Credit Suisse doesn’t have much time to pay up, either. The entire amount of the restitution must be paid by November 28th, which gives the bank one week to come up with the cash.
The investigation into Credit Suisse’s operations spanned several years and was very extensive. It seemed that the government had amassed all of the evidence that it needed to cause Credit Suisse to give up, as they did by pleading guilty back in May of this year. More importantly, by accepting the plea deal, Credit Suisse admitted to several of the allegations against it, including assisting U.S. clients evade domestic taxes by using sham entities to hide assets and using IRS tax forms to further incorrectly document the true transactions.
Credit Suisse also admitted to other types of misconduct such as not maintaining adequate records of transactions involving Americans as well as destroying records and other documents in anticipation of a DOJ investigation. The banking giant also used its employees as unregistered investment advisors on undisclosed foreign accounts.
Though the restitution is a large part of the agreement reached between Credit Suisse and the DOJ, it is not the only component. The Swiss bank has also agreed to hand over any and all evidence and information of its cross-border investing activities. This move should worry any taxpayer that has had any connection with Credit Suisse or their partners. “The Justice Department will continue to vigorously pursue our global enforcement efforts against individuals who avoid their tax obligations by hiding their assets in foreign bank accounts, and the financial institutions, bankers, and other professionals who facilitate these crimes.” said Acting Deputy Assistant Attorney General Wszalek.
Americans that have maintained undeclared accounts overseas have likely heard of the Offshore Voluntary Disclosure Program, which is an effort by the IRS to get taxpayers to come forward and pay any taxes that are owed on the overseas assets plus a small penalty in exchange for the government agreeing not to prosecute you or attempt to collect penalties that can be in excess of the balance of the foreign account. The program has been widely utilized but cannot be entered into if the government has already begun investigating you for any reason. Thus, any evidence or other information that becomes available through the Credit Suisse plea agreement could disqualify you from the program without you even knowing.
If you have had or still have a foreign bank account that hasn’t been declared, it is in your best interest to contact an experienced tax attorney that can analyze your specific situation and provide you with your options. The tax and accounting professionals at the Tax Law Offices of David W. Klasing have years of experience in assisting taxpayers participate in the Offshore Voluntary Disclosure Program and find their way out of other complex tax quandaries. One of the most ineffective ways to take care of your tax troubles is to pretend like they don’t exist and hope that they go away. Contact the Tax Law Offices of David W. Klasing at (800) 681-1295 today for a reduced-rate consultation.