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List of Financial Foreign Institutions or Facilitators Swells to 65

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    As the holiday season approaches, productivity appears to slow as the world prepares for family get-togethers, work parties, and much needed breaks from work. But over at the Department of Justice, it appears that U.S. prosecutors and investigators aren’t taking any breaks. In fact, their recent activity shows that they are ramping up operations to identify, investigate, and prosecute Americans for violations of Foreign Bank Account Reporting (FBAR) laws. This recent activity should act as a warning shot for taxpayers with undeclared foreign accounts. Those taxpayers should consider speaking with an experienced tax attorney as soon as possible.

    According to a Department of Justice press release, yet another Swiss bank has voluntarily entered into the Swiss Bank Program. The Swiss Bank Program is an initiative by the Department of Justice aimed at increasing the number of banks that are willing to hand over documents to U.S. authorities that could incriminate Americans with regard to undeclared foreign bank accounts. In a nutshell, the Swiss Bank Program provides participating Swiss financial institutions with a non-prosecution agreement in exchange for the banks’ cooperation in the American war on hidden foreign bank accounts.

    Under the program, banks are required to:

    • Make a complete disclosure of their cross-border activities;
    • Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
    • Cooperate in treaty requests for account information;
    • Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;
    • Agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and
    • Pay appropriate penalties.

    Standard Chartered Bank (Switzerland) SA, en liquidation (SCB Switzerland), the newest member of the Swiss Bank Program, is a private bank with a sole office in Geneva and is solely owned by Standard Charter PLC, a large British banking institution. According to the DOJ, SCB Switzerland knew or should have known that American customers were violating domestic bank secrecy laws (FBAR). Furthermore, the DOJ asserts that SCB Switzerland assisted U.S. account holders in their attempt to hide their Swiss account(s) by withholding statements that would have been dispatched to the U.S. addresses of the account holder. If statements were sent, no identifying information other than the account number would be included to achieve secrecy. Lastly, SCB Switzerland accepted false W-8BEN documents that asserted that the beneficial owners of certain accounts were non-U.S. citizens. When SCB Switzerland discovered that the documents were false, they continued to provide services to those clients for at least two years. In addition to providing near-unfettered access to SCB Switzerland’s account records, they will pay a penalty of over $6 million.

    FBAR laws require that U.S. residents disclose the existence of an interest in a foreign bank account with a balance of $10,000 or more. If a taxpayer is found to be in violation of FBAR laws, the IRS will determine whether the taxpayer “willfully” failed to declare their foreign bank account. If so, the case is handed off to the Department of Justice for prosecution. Although there isn’t an exact definition of “willful” available to the public, the government has said that a customer of a bank that has entered the Swiss Bank Program will be considered to have willfully violated the law. When a bank, like SCB Switzerland, enters the program, their name appears on the IRS List of Financial Institutions and Facilitators. With this latest agreement between SCB Switzerland and the DOJ, that list will grow to 65 Swiss banks.

    The OVDP May Be An Option

    If you were a customer of SCB Switzerland or any other foreign institution, you may be able to take advantage of the Offshore Voluntary Disclosure Program (OVDP). The OVDP is a program set up by the IRS that allows taxpayers to avoid criminal prosecution by coming forward and disclosing your previously undeclared foreign bank account. But the program has a catch: if the government has already opened an investigation into your affairs (FBAR-related or otherwise), you may be ineligible to participate or receive the maximum protections of the OVDP. Only an experienced tax attorney would be able to determine your ability to take advantage of the OVDP.

    It is easy to see that the U.S. government is relentlessly pursuing those who have violated FBAR laws and banks that have assisted them. If you are an owner of (or have signature authority over) a foreign bank account that hasn’t been declared to the government, it is only a matter of time until your bank or financial institution comes forward and trades your information for “get out of jail free” card. It is in your best interest to act quickly and consult with a tax attorney as soon as possible.

    Contact an Experienced Tax Attorney Today

    The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience in assisting taxpayers with a myriad of tax issues, including participation in the Offshore Voluntary Disclosure Program. The potential life-altering effects of a prosecution and conviction for Foreign Bank Account Reporting violations are too great to try and fight the Government alone. The IRS and DOJ will send their best to obtain a conviction. Ensure that you have a team of zealous advocates to meet them. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.

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